TEXT SIZE : 
[ OkeZone ]
by Wilda Asmarini - Okezone
Hal tersebut disampaikan Direktur Jenderal Minyak dan Gas Bumi Kementerian ESDM Evita Legowo saat ditemui usai bertemu dengan delegasi Prancis di Kantor Kementerian ESDM, Jakarta, Rabu (7/4/2010).
"Dia (delegasi Prancis) bilang salah satunya memberikan pendanaan untuk proyek yang tidak hanya domestik tetapi juga ekspor. Misal biofuel kan ada potensi untuk ekspor, saya dorong untuk ekspor," tutur Evita.
Sementara untuk proyek LNG, menurutnya investor Prancis tersebut tengah mempertimbangkannya. Mereka, lanjutnya, baru memberikan Euro 10 miliar ke PNG LNG Project.
"Mereka (investor Prancis) baru memberi 10 miliar euro ke PNG LNG project, proyek harus ada yang untuk eskpor, tetapi itu pun harus ada keterlibatan pemerintah," tukasnya.
Terkait LNG, Evita menuturkan bahwa investor Prancis tersebut juga mempertanyakan aturan pemerintah tentang LNG. Menurut Evita, pemerintah lebih mendahulukan domestik.
Tapi menurutnya pemerintah menyadari gas tidak bisa diproduksi bila mencapai harga keekonomian. "Karena kalau tidak sampai keekonomian, tidak ada yang mau mengembangkan," tandasnya.
Dalam kesempatan ini Evita juga menyebutkan APBNP untuk harga minyak (ICP) saat ini sementara sebesar USD77 per barel. Salah satu faktor pemicunya yaitu buruknya kondisi cuaca dunia.(ade)
Tuesday, April 20, 2010
Prancis Berpeluang Investasi Biofuel di RI
Tuesday, November 4, 2008
Indonesia Power Report Q3 2008
[ pr-inside ]
The new Indonesia Power Report from BMI forecasts that the country will account for 2.08% of Asia Pacific regional power generation by 2012, with an increasing generation shortfall that provides a growing import requirement. BMI’s Asia Pacific power generation estimate for 2007 is 6,865 terawatt hours (twh), representing an increase of 9.6% over the previous year. We are forecasting an increase in regional generation to 9,370twh by 2012, representing a rise of 36.5%. Asia Pacific thermal power generation in 2007 is estimated by BMI at 5,431twh, accounting for 79.1% of the total electricity supplied in the region.
Our forecast for 2012 is 7,104twh, implying 46.6% growth that reduces the market share of thermal generation to 75.8% – thanks partly to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. Indonesia’s thermal generation in 2007 was 135twh, or 2.49% of the regional total. By 2012, the country is expected to account for 2.52% of thermal generation. For Indonesia, oil is the dominant fuel, accounting for 47.5% of 2007 primary energy demand (PED), followed by gas at 26.5%, coal at 24.3% and hydro with a 1.7% share of PED. Regional energy demand is forecast to reach 4,830mn tonnes of oil equivalent (toe) by 2012, representing 37.3% growth over the period.
Indonesia’s 2007 market share of 3.10% is set to fall to 2.98% by 2012. Indonesia is moving ahead slowly with controversial plans to build its first nuclear power plant, which could be operational by 2017. Indonesia is now ranked sixth, just behind Malaysia in BMI’s updated Power Business Environment rating, reflecting to its low level of energy import dependence and healthy power consumption growth prospects. Several country risk factors offset some of the industry strength, and the country may struggle to keep Philippines and Thailand at bay over the longer term. BMI is now forecasting Indonesian real GDP growth averaging 5.83% per annum between 2007 and 2012, with a 2008 forecast of 6.10%. Population is expected to expand from 231.6mn to 245.3mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly.
The country’s power consumption is expected to increase from 173twh in 2007 to 282twh by the end of the forecast period, leaving a shortfall in generation rising from an estimated 26twh in 2007 to 87twh in 2012, assuming 7.1% annual growth in generating capacity. Between 2007 and 2018, we are forecasting an increase in Indonesian electricity generation of 90.7%, which is among the highest for the Asia Pacific region. This equates to 35.1% in the 2013-2018 period, up from 32.6% in 2007-12. PED growth is set to fall from 25.8% in 2007-12 to 24.0%, representing 63.8% for the entire forecast period. An increase of 168% in hydro-power use during 2007-18 is a key element of generation growth. Thermal power generation is forecast to rise by 88% between 2007 and 2018. More details of the long-term BMI power forecasts can be found in the appendix of this report.
Author:
Mike King
Indonesia biofuel policy to reduce palm oil exports
[ business standard ]
Exports of palm oil from Indonesia, the largest producer, may decline by as much as 1.5 million metric tonnes a year after the nation made the use of renewable energy mandatory, a government official said.
“In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,” Bayu Krisnamurthi, a deputy to Coordinating Minister for Economic Affairs Boediono, said on Wednesday in Jakarta. “This will cut our exports” of palm oil.
A fall in supplies from Indonesia, the top producer of the tropical oil, may help support prices that slumped to a two-year low this week on concern slowing global economic growth will dent demand for commodities.
The mandate is “positive for the week” for palm oil prices, said Tan Ting Min, a plantation analyst at Credit Suisse Group in Kuala Lumpur.
Indonesia said September 26 diesel used for transportation must have minimum 1 per cent biodiesel starting this month. The mix was set at 2.5 per cent for industrial users. The nation also mandated 1 per cent bio-ethanol mix for cars using subsidised fuel starting 2009, while industries using gasoline must ensure 5 per cent of the fuel has bioethanol.
Fossil Fuels: Palm oil, with the highest calorific value of any vegetable oil, can be added to diesel to stretch supplies of fossil fuels. Brazil mandates the use of ethanol, made from sugar cane, in cars while the US uses corn to make ethanol.
Indonesia’s biofuel industry can produce between 1.3 million tonnes to 1.5 million tonnes annually, said Krisnamurthi. Capacity may double to 3 million tonnes by 2010, he said.
The country’s palm oil output will be more than 19 million tonnes next year and exceed 20 million in 2010, he added. Food and chemicals industry may use 4.5 million tonnes this year and next, and 5 million tonnes in 2010, Krisnamurthi said.
Palm oil for December delivery is trading at 1,819 ringgit ($520) a ton on the Malaysia Derivatives Exchange at 4:14 pm local time. Prices have dived 60 per cent from a peak in March.
Futures may average 2,900 ringgit a tonne in 2009, compared with 3,226 ringgit so far this year, Credit Suisse’s Tan said.
Tuesday, January 15, 2008
Indonesia to switch 10 pct petroleum to biofuel
[ reuters ]
By Fitri Wulandari and Naveen Thukral
JAKARTA (Reuters) - Indonesia plans to substitute around 10 percent of its fossil fuel transport consumption with biofuel products by 2010, a senior government official said on Monday.
The resource-rich tropical nation has been pushing the use of biofuels made from various resources such as palm oil, sugar cane and cassava to cut the use of costly petroleum products.
The move aims at easing burden of hefty subsidy on petroleum products without raising the price of subsidized fuel sold on domestic market.
"We can't increase prices of subsidized fuel as it will hurt consumers. But we may be able to cut consumption and replace it with biofuel," Evita Legowo, secretary at the National Biofuel Development Team said at the Reuters Global Agriculture and Biofuel Summit.
By 2010, biofuel products are expected to account for 3.8 million kilolitres of total petroleum consumption for transportation at estimated 34.75 million kilolitres.
Indonesia is Asia Pacific's only OPEC member but it is one of the smallest producers in terms of production and relies on fuel imports as it has failed to tap new oilfields fast enough.
The country has to spend billions of dollars on oil subsidies and importing oil products.
For that, the government plans to increase bioethanol blend in gasoline to 5 percent by 2010 from 3 percent, using cassava and cane molasses--thick syrup produced from sugar cane during the sugar extraction process--as feedstock, she said.
Production capacity for bioethanol using both cassava and cane molasses is expected to reach 3.77 million kilolitres per year, from 135,000 kilolitres per year by the end of December 2007, data from the biofuel team showed.
As for biodiesel, Legowo said the government may keep the biodiesel blend in diesel oil at 2.5 percent due to soaring palm oil prices while trying to boost output of jatropha, a non-edible oil that grows in arid land and needs little care.
"Biodiesel blend will stay at 2.5 percent ... maybe less because we are still waiting for jatropha that we planted last year," Legowo said.
Indonesian state-owned oil firm Pertamina which retails biodiesel at home, has cut the biodiesel blend in diesel fuel to 2.5 percent as rising palm oil prices and lack of incentives cut margins.
Malaysian crude palm oil futures hit a record on Monday with the benchmark March contract KPOH8 ending at 3,414 ringgit a tonne after hitting 3,420 ringgit, surpassing a high of 3,280 ringgit reached on Friday.
Palm oil prices, up nearly 12 percent since the start of the year, were also supported by prospects of Malaysia introducing palm oil-blended diesel at home this year and Indonesia's plans to double biodiesel production.
There are also plans for 12 special biofuel zones by 2010 where investors could develop an integrated biofuel industry, if approved by the government, said Legowo.
Indonesia is developing other raw materials to ensure feedstock supplies for biodiesel and biofuel production. It plans to plant 5.25 million hectares of unused land with palm oil, jatropha, sugar cane and cassava by 2010.
By that time, biofuel products will account for 2 percent of the country's total energy mix of 5.29 million kilolitres.
(Editing by Peter Blackburn)
Wednesday, December 12, 2007
President asks private sector to develop biofuel
[ Antara ]
Nusa Dua (ANTARA News) - President of Indonesia Susilo Bambang Yudhoyono Tuesday appealed to the private sector to increase its role in developing biofuel which is environment-friendly and more economical than fossil fuel.
The president made the appeal when visiting a Sugar Group Companies (SGC) pavilion in a Cool Energy Exhibition held on the occasion of the United Nations Framework Convention on Climate Change (UNFCCC) on Tuesday.
"I hope it will be developed further," he said.
Biofuel was far more economical than fossil fuel, SGC President Director Gunawan Yusuf said in reply to the head of state`s question.
"Without government subsidy premium-grade gasoline is currently priced at 72 dollar cents or around Rp6,600 per liter, while ethanol is only priced at Rp5,000 to Rp6,000 per liter," Gunawan said.
In the long run, another 2.5 million hectares of land would be needed to develop biofuel to replace fossil fuel.
The government would use idle land which currently covered an area of 7 million hectares to meet the need for land, he said.
Separately, on Tuesday, Chief of the National Biofuel Development Team Al Hilal Hamdi said the team intended to make use of another 5 to 6 million hectares of idle land to develop biofuel until 2012. The land is located outside Java.
"We must develop the mass production of biofuel. Therefore, the government has set itself the target of using another 6 million hectares of land until 2012," he said.(*)
Friday, November 30, 2007
More bad rap on Asian biofuels
[ Asia Times ]
by Marwaan Macan-Markar
BANGKOK - European Union (EU) demand for Asian-produced biofuels, particularly palm oil, is coming at a high social and environmental cost, a report released on Tuesday by the United Nations Development Program (UNDP) warns.
The UN agency in its annual "Human Development Report 2007/2008" cautioned countries in the region against following the lead taken by Indonesia and Malaysia, the main producers of palm oil as a biofuel.
"Expansion of cultivation of [oil palm] in East Asia has been associated with widespread deforestation and violation of human rights of indigenous people," said the report, entitled "Fighting climate change: Human solidarity in a divided world".
"Since 1999, EU demand for palm oil, primarily from Malaysia and Indonesia, has more than doubled to 4.5 million tons, or almost one-fifth of world imports," added the 384-page report. "Opportunities for supplying an expanding European Union market have been reflected in a surge of investment in palm oil production in East Asia."
UNDP climate change advisor Martin Krause said at the launch of the report in Bangkok: "There are a lot of safeguards that have to be built in if you want to make palm oil production environmentally sustainable. The debate on this has just begun."
The concerns echo a similar red flag raised last week by another report, "Up in Smoke: Asia and the Pacific", released by a coalition of British development and environmental groups. The rapid growth of palm oil plantations has resulted in massive deforestation in Indonesia, which has led to large amounts of carbon dioxide trapped in the forests being emitted into the atmosphere, stated that report.
"As a result of deforestation, some of which is for palm oil, Indonesia is the third-largest emitter of carbon dioxide, after the USA and China," it said. "Deforestation to make way for large-scale mono-cropping of energy crops obliterates the 'green credentials' of the biofuel."
These cautionary views about the downside of palm oil are expected to feed into discussions at an international climate change meeting to be held in early December in the Indonesian resort-island of Bali. The United Nations Climate Change Conference will be attended by representatives from more than 180 countries with a mission to craft a blueprint for global action to forestall the emerging environmental catastrophe caused by climate change.
The global cultivation of palm oil had reached 12 million hectares by 2005, according to the UNDP, which was almost double the plantation area in 1997. The agency notes that production is dominated by Indonesia and Malaysia, with the former registering the fastest rate of increase anywhere in terms of forests converted into palm oil.
According to the British report, the Southeast Asian archipelago has nearly 6 million hectares of land under palm oil cultivation and Jakarta has set its sights on further expansion. "In 2007, the Indonesian government signed 58 agreements worth US$12.4 billion in order to produce about 200,000 barrels of oil-equivalent biofuel per day by 2010."
Environmentalists view the forests of Indonesia and others in Asia, now under severe threat of being converted into palm oil plantations, as essential to absorb global carbon dioxide emissions. As important are peatlands, which are part of the region's natural forests and are likewise being destroyed at a rapid rate.
"Peatland forests are traditional carbon storehouses. Typically they store up to 30% carbon dioxide," said Shailendra Yashwant, climate and energy campaigner for global environmental lobby Greenpeace in Jakarta. "A 4-million hectare peatland forest in a province in northern Sumatra stores 14.6 gigatons of carbon dioxide."
Greenpeace studies reveal that nearly 28 million hectares of forests have been destroyed in places like Sumatra, Suleweisi and Kalimantan in Indonesia since 1990. Currently thousands of hectares of peatland are being cleared for palm oil plantations - all of which are owned by private companies.
The attraction to palm oil plantations, which preceded the emerging demand for biofuels from the EU, stems largely from the relative ease with which they can be grown and the economic returns they generate. Prices for palm oil have held up well over the years and its not a labor-intensive crop like many other tropical commodities.
As such, other Southeast Asian countries including Myanmar, Thailand, Cambodia, Vietnam and the Philippines are beginning to follow Indonesia's and Malaysia's slash-and-burn model of palm oil production. The Thai government has set its sights on having 1.6 million hectares under oil palm cultivation in the next two decades, a nearly five-fold increase from the current 320,000 hectares.
It's still unclear how much of that earmarked cultivation area will require clear-cutting. The UNDP pointed to some success stories, where environmentally friendly and socially responsible ways of cultivation have taken root in small-scale agro-forestry ventures. However to date, most of that green friendly production has taken place in West Africa, not Asia.
Thursday, November 15, 2007
BioPertamax dan Biosolar Mulai Dipasarkan di Bali
[ ESDM.go.id ]
Untuk pertama kali produk BioPertamax dan Biosolar mulai dipasarkan di luar Jawa. Lokasi yang dipilih adalah Bali. Peluncuran produk BBM PT Pertamina ini dilakukan langsung oleh Presiden Susilo Bambang Yudhoyono, hari Selasa (13/11).
''Inilah kesempatan Indonesia untuk menunjukkan keseriusannya kepada dunia dalam menyediakan dan menggunakan bahan bakar ramah lingkungan,'' ujar Menteri ESDM Purnomo Yusgiantoro. Selain itu juga diungkapkan bahwa langkah ini juga merupakan bagian dari program nasional untuk mempercepat penggunaan bahan nabati.
Monday, November 12, 2007
New company offers promise of biofuel boom
[ theage.com.au ]
A NEW Australian company hopes to tap global demand for biofuels with a $10 million initial public offering this week.
Jatoil's main commodity will be Jatropha oil — derived from a low-cost, high-yielding, fast-growing, plant of the same name it plans to grow and sell overseas.
It will develop its supplies with partners initially in Asia to supply Asia and Europe.
Jatoil will offer up to 35 million shares at 20¢ each to raise up $7 million and may accept oversubscriptions for up to 15 million shares at 20¢ each to raise a further $3 million. The maximum raising of up to $10 million comes in addition to its cash reserves of $5 million.
"We have already entered an agreement to participate in substantial Jatropha projects in Indonesia and we are initially exploring additional opportunities in Sri Lanka and South-East Asia," executive chairman Mike Taverner said.
The offer opens on Friday and closes at the end of the month. It is due to list on the sharemarket on December 12.
■ Mesbon China Nylon hopes Australian investors will weave themselves into its expansion plans through a $20 million public offering. The Chinese yarn-spinning company will issue up to 40 million fully-paid ordinary shares at 50¢ each to raise up to $20 million.
Executive chairman Zhehao Shen said the timing was right "particularly so if local investors can trade China-focused stock on the local Australian bourse".
Auspine chairman Paul Teisseire has been appointed a Mesbon non-executive director.
The offer opens on November 19 and is due to close on December 7. It is due to list on December 18. AAP
Wednesday, October 31, 2007
Rare wildlife in Sumatran forest to be cleared
[Telegraph]
By Charles Clover, Environment Editor
Some of Asia's rarest and most endangered species including tigers, elephants, sun bears and clouded leopards have been found by scientists in Sumatran forests currently being allocated by the Indonesian government for oil palm plantations.
The survey of a logged, unprotected and partly inhabited forest adjacent to a national park found evidence of tigers throughout the area, groups of elephants with calves in half the area and many records of other species such as tapirs and golden cats.
The animals were found by scientists from the Zoological Society of London using camera traps to assess the wildlife interest of "production forest" that the Indonesian government is in the process of allocating for oil palm or timber plantations. "Although we always believed these areas were important, it is incredibly encouraging to have actual, incontrovertible proof of the animals' presence. We hope that this evidence will help persuade the government that such areas are highly important for conservation." The survey covered nearly 2000 square kilometres of degraded, logged and partially settled forest adjacent to Bukit Tiga Puluh National Park in central Sumatra, which has recently been allocated for clearance. The surveys were led by the Society, with survey teams including members of the Frankfurt Zoological Society wildlife protection teams and Indonesian forestry department staff from Bukit 30 National Park. Sarah Christie, carnivore programme manager at the Society said: "This work shows that the criteria for developing land in Sumatra need to be urgently reassessed. Just because forests have been logged does not mean they have lost their value for biodiversity. "Many of these areas are playing a vital role in supporting the last remaining Sumatran tigers. Before any land is allocated for conversion it is vital that thorough assessments are made of the remaining value to wildlife so that important areas can be avoided whilst areas that have to be developed can be done so sustainably." Indonesia, one of the most biodiverse regions in the world, lost over a third of its forest between 1985 and 1997 and was recently named as the third largest carbon-emitter in the world. While the government is taking steps to prevent further loss of primary forest, development of "degraded" or secondary forest by industry is being actively encouraged. Under a proposal being brokered at the talks on a new climate change treaty to replace the Kyoto protocol, due to take place in Bali, Indonesia, in December, rainforest countries could be paid to leave existing forest standing as "carbon sinks." This would applied to degraded forest as well as primary forest. However, international agreements are slow and may not come into force for several years. The Society says that for the wildlife in the area of forest it surveyed the agreement will come too late as a company has been allocated the land. However, in a sign of agreements that could result from the deal this December, the Royal Society for the Protection of Birds recently bought a 200,000 acre logging concession in Sumatra which had many of the species found in the ZSL survey – then said it would not log it. The law had to be changed to make this possible. |
Thursday, October 25, 2007
Conservatives demand strict sustainability rules for biofuels
[ Conservatives.com ]
In a debate in parliament this afternoon, the government is seeking to establish the first fixed targets for biofuels. The Conservatives have been calling for greater use biofuels for several years but are deeply concerned that the measure being put forward by the government today allows targets to be met using biofuels which do not come from sustainable sources.
In reply to the government proposals Julian Brazier, Shadow Minister for Transport (aviation and shipping) will say:
(check against delivery)
"Having listened to the concerns expressed to us by many of our constituents and by organisations such as Greenpeace, Friends of the Earth and aid charities, and in the light of increasing scientific evidence of the problems biofuels can cause if they are produced in a way which is environmentally insensitive, we believe that the measure being put forward by the government today is deeply disappointing.
"If biofuels are to play a successful part in the fight against climate change, it is absolutely vital that they come from sustainable sources. Without clear and binding rules on sustainability, this proposal could damage the environment not protect it. It would be madness if UK biofuel targets actively encouraged people to rip up the rainforest. According to Friends of the Earth, unsustainable biofuels have already contributed to 87% of the deforestation of Malaysia; indeed the destruction of 98% of rainforests there and in Indonesia and the further widespread damage in Brazil are all predicted."
"Serious concerns also need to be addressed regarding the impact of large scale biofuel production on food prices. Most recently the UN special rapporteur on the right to food, Jean Ziegler earlier this month described current approaches to biofuels as: "… a total disaster for those who are starving."
"We support sustainable biofuels and believe that the government should take its proposals away and bring them back in a form which has effective safeguards against the environmental and biodiversity damage that expert evidence now tells us that some types of biofuel production can cause."
Conservatives believe that this statutory instrument, by deferring sustainability criteria until at least 2011, represents a massive missed opportunity to benefit the environment.
Sunday, October 14, 2007
Indonesia betting on biofuel crops as its regal forests dwindle
[Taipei Times]
By Samantha Brown
AFP, JAKARTA
Saturday, Sep 15, 2007, Page 9
Southeast Asian nations are gearing up for a palm oil boom as interest in biofuels soars, but activists warn the crop may not satisfy a global thirst for green, clean energy and would require chopping further into forests.
They caution that oil palm plantations require massive swathes of land -- either what's left of the region's disappearing forests, denuded plots that would be better off reforested, or land critical to supporting local people.
Governments and companies have been scrambling to cash in since palm oil prices jumped last year amid spiking demand from China, India and Europe, where biofuels should comprise 10 percent of motor fuels by 2020.
Indonesia has launched a particularly ambitious biofuels expansion program, which aims to source 17 percent of its energy needs from renewable sources by 2025.
Evita Herawati, an assistant to Indonesia's minister of energy, said 5.5 million hectares will be set aside for biofuel plantations by 2010, 1.5 million hectares of which are for oil palm.
The main objective is "to create jobs and alleviate poverty," with some 3.5 million new jobs being eyed by 2010.
"A lot of forest has been cut down but they didn't use it at all. We would like to use it for this program," she said, adding that so far 58 deals worth a total of US$12.4 billion have been signed with companies.
She estimated that just in Kalimantan, the Indonesian portion of Borneo island, about 5.5 million hectares are available for use -- an area far larger than Denmark and a bit smaller than Sri Lanka. Nine million additional hectares are available elsewhere, Herawati said.
The issue of where the land will come from worries activists, who point out that much of Indonesia's peatland forests have already been destroyed, releasing huge amounts of carbon dioxide.
Rully Syumanda, of Indonesia's environmental watchdog Walhi, said proposing palm oil plantations has been used in recent years in Indonesia "as a pretext to clear land and take the more valuable logs."
He estimates that nearly 17 million hectares of Indonesia's forests have been cleared ostensibly for oil palm plantations since the 1960s, but only 6 million hectares have been cultivated.
Though he concedes that the government is now making efforts to reforest, catch offenders and audit the industry, Syumanda said these were "insignificant compared to the damage that is being inflicted on the environment."
Rudi Lumuru, from Sawit Watch, an industry monitor, meanwhile said much of this "empty" land is actually used by local people.
He reckons more than 500 communities have been embroiled in conflicts with more than 100 palm oil companies, typically from Malaysia.
"This land has been used since a long time ago by the people. They live on the land, they grow on the land," he said. "The government says people can make money, but it's about transition of culture. The culture of the farmers, it's rice, coffee, cocoa -- it's not palm oil."
While compensation payments may be meted out, they end up meager thanks to endemic corruption, he said.
The Indonesian industry says it is cleaning up its act.
"The industry now is trying to avoid destroying land," said Derom Bangun, executive chairman of the Indonesian Palm Oil Association. "Companies no longer clear land by burning or in ways that harm the environment or wildlife."
Indonesian companies have joined the Roundtable on Sustainable Palm Oil (RSPO), a WWF-led initiative to engage palm oil companies, and is trying to abide by their principles, he said.
Technology minister Agusman Effendi said that economic factors as well as "sustainability of the environment and the way the government can give extra support to the poor" needed to be considered.
"The `what' has been defined clearly, but the `how to' is the thing that has been criticized by the public," he said.
Companies in Malaysia, the world's largest palm oil producer -- expected to be eclipsed by Indonesia this year -- are being lured here by the vast expanses of already-cleared land.
Malaysian plantations minister Peter Chin insists palm oil production does not damage the environment and said Malaysian companies will boost productivity by replanting with higher yielding clones and adopting good agronomic practice.
"We are committed to ensuring that whatever we do now is not at the expense of the environment and our future generations," he said.
According to the Malaysian Palm Oil Board, 65 percent of Malaysia's total land area of almost 33 million hectares is comprised of forest. Palm oil plantations use 12 percent.
Alvin Tai, plantation analyst at OSK Securities, said most of the companies listed on the Malaysian bourse are expanding in Indonesia as landbank in Malaysia is limited.
He said most major plantation firms were RSPO members and "they have the resources to maintain those standards. It's the smaller plantation owners that are a concern".
Meena Rahman from Friends of the Earth Malaysia disputes the government's claims and says that the group is particularly worried about projects in Sarawak, located on the Malaysian side of Borneo island.
She says there is evidence that 1.5 million hectares of land that was to be set aside for protection and water catchment purposes has been planted with oil palm as well as pulp and wood trees.
"Maybe what Peter Chin is saying is that they are planting palm oil in areas that have already been logged -- but they should allow reforestation to take place instead of allowing palm oil expansion," she said.
Malaysia's northern neighbor Thailand is also getting in on the game.
High prices for palm oil, driven by Bangkok's search for alternative fuels, have driven more and more farmers to convert rubber and fruit plantations to grow oil palm, an official from Thailand's agriculture ministry said.
Local prices of palm oil have almost doubled to more than 4 baht (US$0.07) per kilogram from 2 baht last year.
Last year Thailand had some 32,000 hectares planted with oil palm, but the area is expected to jump to 81,000 by year end. An additional 400,000 hectares of unused farmland in the south could also be used, the official said.
The government has provided soft loans to help farmers make the switch, and is considering a floor price for the crop, she said, adding that "we don't have environmental issues" linked to palm oil, like Thailand and Malaysia.
The Philippines meanwhile has about 25,000 hectares under cultivation, but some 454,000 hectares of "disposable land" -- pasture or shrubbery -- mostly in the south, has been earmarked as well, the agriculture department said.
But so far, only one Singapore-based company has come sniffing, seeking at least 25,000 hectares of land. This story has been viewed 885 times.
Green fuel gets a black name
[ The Sydney Morning Herald ]
The race for clean energy may be doing more harm than good, writes Marian Wilkinson.
It is a sickening picture. A photograph of six soft-eyed baby orang-utans stamped with the words "Orphaned by Palm Oil companies". The image, along with scores of others showing adult apes staring out through the bars of cages, has created a public relations disaster for global companies buying the oil that many hoped would fuel a green energy boom.
This week, as Greenpeace International launched a "Forest Defenders Camp" in the Indonesian province of Riau, where swathes of orang-utan habitat have been cleared by felling and fire for lucrative palm oil plantations, the "oil for ape" scandal hit Australia.
Caught in the middle is a quietly spoken Sydney businessman who walked away from the petroleum industry several years ago convinced that price, supply and climate change made it yesterday's game. Barry Murphy, a former Caltex Oil chief, plunged into the heady world of "clean" energy hoping to fuel Australian industry with diesel made from the world's second most popular edible oil.
"It would be foolish to ignore the fact that people are anxious about fossil fuel and its effect on the environment and that it's not sustainable," Murphy told the Herald last week. "People are naturally looking to palm oil." Why? "It has the highest yield of any of the vegetable oils. You can get 4000 to 5000 litres of oil per hectare per year." That is about 10 times more productive than soya beans.
Perhaps unfortunately, Murphy is not alone in his thinking. In January this year, the China National Offshore Oil company reportedly signed contracts to develop 1 million hectares of palm oil plantations in Indonesia and Papua New Guinea.
This thinking has sent palm oil stocks soaring. European countries hoping to slash their greenhouse gas emissions by using biofuels have also turned their attention to palm oil. Already a ubiquitous ingredient in supermarket products from margarine to lipstick, palm oil's promise as a clean biofuel supercharged the price which reached a staggering $US828 ($921) a metric tonne last month, a leap of more than $US300 in just one year.
But the palm oil boom is proving to be an ecological disaster in Indonesia and Malaysia, which produce more than 80 per cent of the world supply. The trade has helped drive Indonesia's spectacular rate of deforestation and the burning of its peatlands. Early this year, the United Nations released a report on the crisis, finding that the explosion in palm oil plantations "is now the primary cause of permanent rainforest loss" in Indonesia and Malaysia. As the forest disappears, local environmentalists estimate that up to 50 orang-utans are dying each week.
Palm oil furore could stymie green fuel plan
[ The Sydney Morning Herald ]
THE rush to replace carbon-emitting petroleum with "clean green" biofuels is threatening to stall in the face of rising food prices, Federal Government disincentives and growing opposition from environmental groups sounding the alarm about large-scale deforestation to support fuel crops.
Now a planned $30 million biodiesel plant in Port Botany is under attack by the Greens because it will use palm oil from Indonesia and Malaysia. Its future is up in the air as the developer, Natural Fuels Australia, decides whether it should go ahead. The chairman of the company, Barry Murphy, said yesterday that the Federal Government clean fuels grant did not in reality encourage the use of pure biodiesel from crops and therefore "makes the economics difficult". He also acknowledged the price of feedstock and the global issues around climate change and deforestation made the decision a tough one.
The Greens state MP Ian Cohen is demanding that NSW reject the planning request by Natural Fuels for the biodiesel plant, saying the minister, Frank Sartor, has failed to consider its effect on rainforest destruction because of the plant's proposed use of palm oil. Mr Cohen has written to Mr Sartor saying the plant, rather than helping climate change, "may worsen the global crisis whilst hastening the destruction of tropical forests".
A spokesman for the Planning Department said the importation of palm oil was a Federal Government matter.
This week Natural Fuels found itself at the centre of a political storm over its planned importation of palm oil for use in its plant in Darwin, which will come on line in December.
The Federal Environment Minister, Malcolm Turnbull, announced Australia would push for international action on the sustainable sourcing of palm oil at the United Nations climate talks in Bali in December.
The Federal Government provides a 38 cents a litre subsidy for biofuels, including those made from palm oil, as part of its push to encourage clean green fuel. But at the same time Mr Turnbull has pledged $200 million to stop deforestation in South-East Asia, caused partly by a huge expansion in palm oil plantations.
Earlier this year the UN reported that the drive for new palm oil plantations was one of the greatest threats to the rainforests and the endangered orang-utans in the region. "In Indonesia and Malaysia it is now the primary cause of permanent rainforest loss," the report found. Plantations in Indonesia have expanded from 600,000 hectares in 1985 to an estimated 6.4 million hectares this year, the Palm Oil Action Group says.
The devastation of rainforest and peatlands has caused some big European biofuel companies to shun palm oil as a source. But companies like Natural Fuels are anxious to create a "sustainable" source of palm oil and have joined forces with large companies such as Cadbury Schweppes and Unilever, and the environment group WWF, to form the Roundtable on Sustainable Palm Oil.
At a meeting next month in Kuala Lumpur, the group will call on growers, wholesalers and retailers to accept a code of practice curbing destructive activities, including the clearing and burning of rainforest. Mr Murphy has been heavily involved in the reforms and said the company realised "these are real issues and need to be addressed".
But several environmental groups, including Greenpeace, say the roundtable group is dependent on self-regulation and will be incapable of enforcing sustainable production.
Thursday, October 11, 2007
How to Beat the High Cost of Gasoline. Forever!
[Fortune]
Stop dreaming about hydrogen. Ethanol is the answer to the energy dilemma. It's clean and green and runs in today's cars. And in a generation, it could replace gas.By Adam Lashinsky and Nelson D. SchwartzJanuary 24, 2006: 4:09 PM EST
(FORTUNE Magazine) - You probably don't know it, but the answer to America's gasoline addiction could be under the hood of your car. More than five million Tauruses, Explorers, Stratuses, Suburbans, and other vehicles are already equipped with engines that can run on an energy source that costs less than gasoline, produces almost none of the emissions that cause global warming, and comes from the Midwest, not the Middle East.
These lucky drivers need never pay for gasoline again--if only they could find this elusive fuel, called ethanol. Chemically, ethanol is identical to the grain alcohol you may have spiked the punch with in college. It also went into gasohol, that 1970s concoction that brings back memories of Jimmy Carter in a cardigan and outrageous subsidies from Washington. But while the chemistry is the same, the economics, technology, and politics of ethanol are profoundly different.
Instead of coming exclusively from corn or sugar cane as it has up to now, thanks to biotech breakthroughs, the fuel can be made out of everything from prairie switchgrass and wood chips to corn husks and other agricultural waste. This biomass-derived fuel is known as cellulosic ethanol. Whatever the source, burning ethanol instead of gasoline reduces carbon emissions by more than 80% while eliminating entirely the release of acid-rain-causing sulfur dioxide. Even the cautious Department of Energy predicts that ethanol could put a 30% dent in America's gasoline consumption by 2030.
We may not have to wait that long. After decades of being merely an additive to gasoline, ethanol suddenly looks to be the stuff of a fuel revolution--and a pipe dream for futurists. An unlikely alliance of venture capitalists, Wall Streeters, automakers, environmentalists, farmers, and, yes, politicians is doing more than just talk about ethanol's potential. They're putting real money into biorefineries, car engines that switch effortlessly between gasoline and biofuels, and R&D to churn out ethanol more cheaply. (By the way, the reason motorists don't know about the five-million-plus ethanol-ready cars and trucks on the road is that until now Detroit never felt the need to tell them. Automakers quietly added the flex-fuel feature to get a break from fuel-economy standards.)
What's more, powerful political lobbies in Washington that never used to concern themselves with botanical affairs are suddenly focusing on ethanol. "Energy dependence is America's economic, environmental, and security Achilles' heel," says Nathanael Greene of the Natural Resources Defense Council, a mainstream environmental group. National- security hawks agree. Says former CIA chief James Woolsey: "We've got a coalition of tree huggers, do-gooders, sodbusters, hawks, and evangelicals." (Yes, he did say "evangelicals"--some have found common ground with greens in the notion of environmental stewardship.)The next five years could see ethanol go from a mere sliver of the fuel pie to a major energy solution in a world where the cost of relying on a finite supply of oil is way too high. As that happens, says Vinod Khosla, a Silicon Valley venture capitalist who has become one of the nation's most influential ethanol advocates, "I'm absolutely convinced that without putting any more land under agriculture and without changing our food production, we can introduce enough ethanol in the U.S. to replace the majority of our petroleum use in cars and light trucks."
Filling up on ethanol isn't new. Henry Ford's Model Ts ran on it. What's changing is the cost of distilling ethanol and the advantages it brings over rival fuels. Energy visionaries like to dream about hydrogen as the ultimate replacement for fossil fuels, but switching to it would mean a trillion-dollar upheaval--for new production and distribution systems, new fuel stations, and new cars. Not so with ethanol--today's gas stations can handle the most common mixture of 85% ethanol and 15% gasoline, called E85, with minimal retrofitting. It takes about 30% more ethanol than gasoline to drive a mile, and the stuff is more corrosive, but building a car that's E85-ready adds only about $200 to the cost. Ethanol has already transformed one major economy: In Brazil nearly three-quarters of new cars can burn either ethanol or gasoline, whichever happens to be cheaper at the pump, and the nation has weaned itself off imported oil.
And have you heard about GM's yellow gas caps? In the next few weeks the auto giant is set to unveil an unlikely marketing campaign drawing attention to E85 and its E85-ready cars and trucks like the Chevy Avalanche. They will sport special yellow gas caps, and if you already own such a vehicle, GM will send you a gas cap free. California governor and Hummer owner Arnold Schwarzenegger is backing a ballot initiative that would encourage service stations to offer ethanol at the pump. Even big oil companies like Royal Dutch Shell and Exxon Mobil are funding ethanol research. Says Beth Lowry, GM's vice president for energy and environment: "People's perception used to be 'The agricultural lobby is very interested in it.' Now people are waking up and saying, 'This isn't just about the Midwest. This is about the U.S. as a whole.' " Adds Daniel Yergin, one of the country's top energy experts: "I don't think I've seen so many kinds of renewable energy fermenting and bubbling as right now. The very definition of oil is broadening."
Not that ethanol will replace gasoline overnight. There are 170,000 service stations in the U.S.; only 587 (count 'em!) sell E85. To refine enough ethanol to replace the gas we burn (140 billion gallons a year) would require thousands of biorefineries and hundreds of billions of dollars. Yet one of capitalism's favorite visionaries is convinced that very soon filling up on weeds and cornhusks will be no more remarkable than tanking up on regular. Says Richard Branson, whose Virgin Group is starting an ethanol-inspired subsidiary called Virgin Fuels: "This is the win-win fuel of the future."
BARRELS FROM BUSHELS
In Decatur, Ill., nobody is waiting around for the future; demand for ethanol from corn is booming right now. This grain-elevator-dotted town is home to agribusiness giant Archer Daniels Midland, which makes it the capital of the old-school heavily subsidized U.S. ethanol industry. On a blustery January day, the air is thick with fog, sleet, and condensation from the corn mills on the 600-acre complex next to ADM's corporate office. Outside the ethanol plant, the air smells like grape juice gone bad. Inside, with its giant vats and fermentation towers, the biorefinery resembles a winery, but it's much noisier.
ADM used to call itself "Supermarket to the World." Today, reflecting its emergence as an alternative-energy supplier, it boasts of being "Resourceful by Nature." The company created the corn-ethanol industry when Jimmy Carter asked it to in 1978--the oil-shocked President wanted a homegrown alternative to gasoline. ADM now pumps out more than a billion gallons of ethanol per year. While the fuel accounts for just 5% of the company's $36 billion in annual sales, analysts estimate that it generates 23% of ADM's operating profit. Says Allen Andreas, the courtly 62-year-old CEO: "We've always been feeding people and looking for better alternatives; now we're doing the same thing in energy."
ADM aims to be a big player in what Andreas calls the shift "from hydrocarbons to carbohydrates." But for now it's ignoring E85 and cellulosic ethanol in favor of keeping pace with demand that is already booming. Corn ethanol's main use is as an additive that helps gasoline burn more efficiently. ADM sells nearly its entire output to oil companies, which use ethanol as a substitute for MTBE, a petroleum-based additive that is toxic and is now banned in California and 24 other states. With two billion gallons of MTBE still in use annually and 25 states that have yet to ban it, the ethanol industry could grow 50% simply by replacing MTBE.
In September, ADM announced a nearly 50% expansion project, or 500 million new gallons of annual production capacity. Archrival Cargill is belatedly ramping up ethanol production, and new entrants are using private capital to build ethanol plants. The only publicly traded pure-play ethanol maker, Pacific Ethanol of Fresno, plans to build five plants in California and has raised a total of $111 million, including $84 million from Bill Gates. (For a guide to playing the ethanol boom, see Investing.) All told, the planned projects represent a nearly $2.6 billion investment and will increase U.S. ethanol capacity by 40%.
Other major players are making long-term ethanol bets. Ford is working with VeraSun, a startup in South Dakota, to promote E85 fueling stations. Shell is the primary backer of Canada's Iogen, which is attempting the first large-scale production of cellulosic ethanol--the kind made from cornstalks and grasses--at a pilot plant in Ottawa (see following story, "Biorefinery Breakthrough"). Exxon Mobil has pledged $100 million to Stanford University for research into alternative fuels. The oil giant's new CEO, Rex Tillerson, visited the campus last year to hear what researchers are cooking up. Biology professor Chris Sommerville says the change in the industry is palpable: "I went to six scientific conferences on biofuels last year; the previous 29 years I didn't go to any."The biggest alternative-fuels player of all, of course, is Uncle Sam. Oil refiners receive a 51-cent tax credit for every gallon of ethanol they blend into their gasoline. That alone will cost taxpayers more than $7 billion over five years, estimates the Congressional Budget Office. The U.S. has also funded research into biodiesel, which uses deep-fryer grease and other nontoxic ingredients to replace regular diesel fuel. (See box at left.) But ethanol will never really take off unless consumers demand it, and while the U.S. industry still relies on taxpayer largesse, Brazil has leaped to the next step: a profitable free-market system in which the government has gotten out of the way.
HOW BRAZIL BEATS THE U.S.
Near the prosperous farm town of Sertãozinho, some 200 miles north of São Paulo, the fuel that will fill the tanks of nearly three million Brazilian cars in a few months is still waist-high. Lush sugar-cane fields stretch as far as the eye can see, interrupted only by the towering white mills where the stalks of the plants will be turned into ethanol when the harvest begins in March.
Brazil boasts the biggest economy south of Mexico, and with annual GDP growth of 2.6%, it is a powerhouse you might expect to consume growing amounts of oil, coal, and nuclear energy. But Brazil also happens to have the perfect geography for growing sugar cane, the most energy-rich ethanol feedstock known to science. And so, for Brazil's 16.5 million drivers, there is ready access to what's known in Portuguese as álcool at nearly all of the country's 34,000 gas stations. "Everyone talks about alternative fuels, but we're doing it," says Barry Engle, president of Ford Brazil. Ethanol accounts for more than 40% of the fuel Brazilians use in their cars.
While oil frequently has to be shipped halfway around the world before it's refined into gasoline, here the sugar cane grows right up to the gates of Sertãozinho's Santa Elisa mill, where it will be made into ethanol. There's very little waste--leftovers are burned to produce electricity for Santa Elisa and the local electrical grid. "The maximum distance from farm to mill is about 25 miles," says Fernando Ribeiro, secretary general of Unica, the trade association that represents Brazilian sugar-cane growers. "It's very, very efficient in terms of energy use."
Although Brazilians have driven some cars that run exclusively on ethanol since 1979, the introduction three years ago of new engines that let drivers switch between ethanol and gasoline has transformed what was once an economic niche into the planet's leading example of renewable fuels. Ford exhibited the first prototype of what came to be known as a flex-fuel engine in 2002; soon VW marketed a flex-fuel car. Ford's Engle says flex-fuel technology helps avoid problems that had plagued ethanol cars, such as balky starts on cold mornings, weak pickup, and corrosion.
Consumers loved flex-fuel because it meant not having to choose between ethanol and gas models--memories were still fresh of the 1990 sugar-cane shortage, when ethanol-car owners found themselves, well, out of gas. Today "nobody would buy an alcohol-only car, even with tax incentives," says sales manager Rogerio Beraldo of Green Automoveis, a sprawling dealership in São Paulo. "Brazilians are traumatized by our earlier experience, when supplies ran out. But with flex-fuel, there's no risk of that."With Brazilian ethanol selling for 45% less per liter than gasoline in 2003 and 2004, flex-fuel cars caught on like iPods. In 2003, flex-fuel had 6% of the market for Brazilian-made cars, and automakers were expecting the technology's share to zoom to 30% in 2005. That proved wildly conservative: As of last December, 73% of cars sold in Brazil came with flex-fuel engines. There are now 1.3 million flex-fuel cars on the road. "I have never seen an automotive technology with that fast an adoption rate," says Engle.
Ethanol's rise has had far-reaching effects on the economy. Not only does Brazil no longer have to import oil but an estimated $69 billion that would have gone to the Middle East or elsewhere has stayed in the country and is revitalizing once-depressed rural areas. More than 250 mills have sprouted in southeastern Brazil, and another 50 are under construction, at a cost of about $100 million each. Driving to lunch at his local churrasco barbecue spot in Sertãozinho, the head of the local sugar-cane growers' association points to one new business after another, from farm-equipment sellers to builders of boilers and other gear for the nearby mills. "My family has been in this business for 30 years, and this is the best it's been," says Manoel Carlos Ortolan. "There's even nouveaux riches."
The key to Brazil's success is that consumers are choosing ethanol rather than being forced to buy it. Brazil's military dictators tried the latter approach in the 1970s and early 1980s, by offering tax breaks to build mills, ordering state-owned oil company Petrobras to sell ethanol at gas stations, and regulating prices at the pump. This bullying--and cheap oil in the 1990s--nearly killed the market for ethanol until flex-fuel came along. The regime wasn't good for much, says consultant Plinio Nastari, but it did create the distribution system that enables drivers to fill up on ethanol just about anywhere.Even though the U.S. will never be a sugar-cane powerhouse like Brazil, investors now view Rio as the future of fuel. "I hate to see the U.S. ten years behind Brazil, but that's probably about where we are," says one shrewd American freethinker, Ted Turner.
ETHANOL FINDS A GODFATHER
There are venture capitalists, and then there's Vinod Khosla. A co-founder of Sun Microsystems and a partner at Kleiner Perkins, he was an early backer of Juniper Networks, whose technology helped end decades of dominance by traditional telecom manufacturers. A lean, 50-year-old native of India, Khosla says, without a hint of modesty, "I love the challenge of breaking monopolies."
Frustrated that Kleiner Perkins wasn't taking enough risks after the dot-com crash, Khosla opted out of Kleiner's most recent fund and started his own group, Khosla Ventures. He'd been dabbling in environmentalism but never expected to become an investor. Brazil's success, however, made him wonder about ethanol's U.S. potential. "I spent two years trying to convince myself that this was never going to be more than another minor alternative fuel," he says. "What I discovered was that ethanol might completely replace petroleum in this country. And a lot of countries. This was a great shock to me."
Pretty soon Khosla was surprising plenty of others. He put together a PowerPoint presentation, "Biofuels: Think Outside the Barrel," which he fires up on a moment's notice. He has made the pitch on ethanol to the President's Council of Advisors on Science and Technology and elsewhere in the White House. He is also behind California's upcoming ballot initiative to fund a subsidy for gasoline retailers that add E85 fuel pumps. "Getting distribution going is the real problem," says Khosla. "We need to increase blending and then introduce E85 pumps, and the possible will become the probable."
His conversion to energy investing is part of a Silicon Valley trend, as VCs seek the rapid growth and giant markets that computers once offered. VantagePoint Venture Partners in San Bruno, for instance, established a fund called New Energy Capital that invests in ethanol, wind power, and other energy projects. Nth Power, a San Francisco energy-investment firm, estimates that $700 million of the $21 billion flowing into venture funds last year were earmarked for "clean technology" startups.
CELLULOSE NIRVANA
No one, not even a professionally optimistic VC, thinks we're anywhere near getting rid of gasoline. The oil superstructure is simply too efficient and too entrenched to just go away. Nor could corn ethanol generate enough fuel to run America's cars, pickups, and SUVs. Already ethanol gobbles up 14% of the country's corn production. Converting a bigger share into fuel would pinch the world's food supply--a favorite objection of skeptics. Critics also contend that producing fuel from crops consumes more energy than it yields. On this topic of endless Internet bickering, the Energy Department recently reported, "In terms of key energy and environmental benefits, cornstarch ethanol comes out clearly ahead of petroleum-based fuels, and tomorrow's cellulosic-based ethanol would do even better."
Because cellulosic ethanol comes from cornstalks, grasses, tree bark--fibrous stuff that humans can't digest--it doesn't threaten the food supply at all. Cellulose is the carbohydrate that makes up the walls of plant cells. Researchers have figured out how to unlock the energy in such biomass by devising enzymes that convert cellulose into simpler sugars. Cellulose is abundant; ethanol from it is clean and can power an engine as effectively as gasoline. Plus, you don't have to reinvent cars. Ratcheting up production of cellulosic ethanol, however, is a gnarly engineering problem.
The onus now is on companies like Genencor, a Palo Alto biotech. Its biological enzymes are used to break down stains in Tide detergent and achieve just the right distressed look in blue jeans. But making underpants whiter and denim bluer is nothing compared with breaking America's longstanding addiction to gasoline. The best way to do this would be to bring down the cost of ethanol to the point where consumers clamor for it. Before flex-fuel engines came along, Brazilians would mix their own rabo de galo (cocktail) of ethanol and gasoline when filling up, simply because it was cheaper than straight gas. Genencor says its enzymes have cut the cost of making a gallon of cellulosic ethanol from $5 five years ago to 20 cents today. Now refiners have to learn how to scale up production. Canada's Iogen is the furthest along in commercialization; another hopeful is BC International, a Dedham, Mass., company that's building a cellulosic ethanol plant in Louisiana.
There's still a role for government--and we don't mean more handouts for corn growers or distillers. The recently enacted energy bill takes steps in the right direction, like mandating the use of 250 million gallons of cellulosic ethanol a year by 2013, but much more can be done. Easing the tariff of 54 cents per gallon on imports of ethanol from Brazil and other countries would certainly help. Because sugar cane generates far more ethanol per acre than corn, Brazil can produce ethanol more cheaply than the U.S. Not only would importing more of it broaden access to ethanol for U.S. buyers, but it would also make it cheaper for the ultimate consumers--us. That in turn would spur demand at the pump and encourage service station owners to offer ethanol more widely. What's also needed is for someone big--like Shell or BP, which tout themselves as green companies--to commit to cellulosic ethanol on a commercial scale. Shell's bet on Iogen is minuscule compared with the $20 billion it plans to spend on producing oil and gas off Russia's Sakhalin Island.
Of course, the timing of when ethanol goes from dream to reality isn't just a matter of an investment here or a subsidy there. It took decades of ferment in Brazil before serendipity in the form of high gas prices and flex-fuel engines made ethanol an everyday choice for consumers. But the sooner we start, the greater our ability to shape a future that's not centered on increasingly expensive oil and gas. It's not as if gasoline demand is going to go down: As long as the Chinese and the Indians want our lifestyle--and they do--you can forget about oil at $10 or even $20 a barrel. Whatever the technological challenges, a world of abundant, clean ethanol is suddenly looking a lot more realistic than a return to the days of cheap, inexhaustible oil.
FEEDBACK alashinsky@fortunemail.com; nschwartz@fortunemail.com; sbrown@fortunemail.com
Uni Eropa lirik biofuel Indonesia
[Bisnis Indonesia]
JAKARTA, 06/03/07: Uni Eropa melirik Indonesia sebagai sumber bahan bakar nabati (BBN) atau biofuel, menyusul arahan Komisi Eropa bahwa 5,75% bahan bakar untuk transportasi di kawasan tersebut harus berasal dari BBN pada 2010.
Dengan diliriknya Indonesia sebagai sumber BBN internasional, menurut Deputi Menko Perekonomian Bidang Pertanian dan Kelautan Bayu Krisnamurthi, maka pengembangan bahan bakar nabati tidak boleh setengah hati. Sebab selain Indonesia, potensi BBN Brasil juga diperhitungkan oleh Uni Eropa.
"Jadi Indonesia harus proaktif dalam merebut pasar Eropa, mengingat kawasan tersebut baru tahap awal untuk meningkatkan penggunaan BBN secara signifikan," ujarnya di Jakarta, baru-baru ini.
Guru Besar Corporate Governance Fakultas Ekonomi Universitas Indonesia (FEUI) Akhmad Syakhroza membenarkan Uni Eropa mulai melakukan diversifikasi bahan bakar ke energi nabati.
"Pengembangan BBN dilakukan oleh negara-negara Eropa sebagai jawaban atas kebutuhan untuk melakukan diversifikasi energi. Baik karena alasan kelestarian lingkungan maupun karena desakan akibat kenaikan harga bahan bakar fosil," paparnya.
Bahkan upaya tadi, menurut dia, diperkuat dengan arahan Komisi Eropa untuk mengefektifkan penggunan 5,57% BBN bagi transportasi pada 2010.
Akan tetapi arahan Komisi Eropa bersifat mandatory. Artinya, menurut undang-undang, jumlah pemakaian BBN yang ditetapkan harus dipenuhi. UU tersebut diperkirakan mulai berlaku akhir 2007 atau awal 2008.
Komisi Eropa telah menyatakan bahwa BBN untuk Eropa tersebut tidak dapat dipenuhi oleh produksi dari Eropa sendiri. Saat ini kebutuhan bahan bakar untuk transportasi di Eropa sekitar 38 juta ton per tahun, dengan kontribusi BBN baru mencapai 1%-1,5%.
"Meningkatnya konsumsi BBN lebih dari 1,5 juta ton dalam 3 tahun merupakan tantangan besar bagi industri Eropa. Terutama karena telah timbul kekhawatiran kompetisi sumber daya untuk BBN dan sumber daya untuk pangan," papar Syakhroza.
Energy or Food? – Overcoming the Biofuels Dilemma
Mriganka Jaipuriyar, Platts News Editor
[Insight]
Biofuels offer new sources of energy but attention has increasingly focused on the threat of higher food prices. Some options may, however, avoid the problem.
IN ITS AGRICULTURE OUTLOOK 2007-2016, the Organization for Economic Cooperation and Development highlighted that growing demand for biofuels is fundamentally changing agricultural markets and driving world food prices up. Against this background, some biodiesel producers are turning to jatropha curcas as their preferred feedstock amid soaring prices of traditional feedstocks such as palm oil.
Jatropha curcas is an inedible shrub that can be grown on semi-arid land, and therefore does not compete for space with good agricultural land. Under optimum conditions jatropha seeds can yield up to 40% oil content. Seeds are crushed to produce oil for refining into biodiesel.
Moreover, jatropha-based biodiesel producers typically have control over the entire value chain from plantations to refining, and hence are better able to manage costs. By comparison "buying palm oil from the 'big boys' means that we will have to buy at international prices, dictated by others," according to Peter Cheng, CEO of Van Der Horst Holdings.
Cheng's company has embarked on a project to build a 200,000 mt/year biodiesel plant in Singapore. It will break away from conventional palm oil to use jatropha as feedstock, affording the company more control over its raw material costs.
"We intend to grow our own agricultural oil from japtropha curcas and marine algae," Cheng said. "By employing manpower to harvest our own jatropha from our own plantation means that we are in control of our own feedstock."
A similar story comes from the Philippines which currently produces some 115 million liters of biodiesel annually from coconut and palm oil. Planned jatropha projects are expected to significantly lower costs, Peter Anthony A. Abaya of state-owned Philippine National Oil Co-Alternative Fuels Corp. said. PNOC-AFC was set up in 2006 to lead the country's biofuels development.
"According to our calculations, we can sell jatropha-based biodiesel at Peso 35/liter and still make a profit," Abaya said.
PNOC-AFC has signed an agreement with South Korea's Samsung to set up an integrated jatropha plantation and biofuels plant project. Their preliminary plan is to develop a 120,000 hectare jatropha plantation and a 200,000 mt/year biofuels refinery.
However, not all biodiesel producers favor alternative crops such as jatropha. Andrew Goh, chief financial officer of Malaysia-based Carotech, said his company would not use jatropha. "We would not use such feedstock as it does not allow us to maximize our return. With palm oil, we are able to produce biodiesel, glycerin, palm vitamin E, beta carotene and sterols (steroid alcohols)."
"You will not be able to extract the vitamin E, beta carotene and sterols from jatropha," Goh said. "Therefore, assuming the cost of jatropha oil is the same as those of palm-a very optimistic assumption-we will lose 50% of our revenue by using jatropha."
But jatropha has powerful supporters. Oil major BP is setting up a joint venture with UK biodiesel producer D1 Oils that aims at becoming the world's biggest producer of jatropha oil. D1 Oil specializes in making biodiesel from jatropha with plantations in India, southern Africa and Southeast Asia.
The venture plans to invest $160 million over the next five years and produce up to 2 million mt of jatropha oil a year by 2011.
