Report: synthetic biofuels (BtL) and bioenergy efficient, competitive and sustainable in Germany

A new comprehensive report by Germany's Karlsruhe Institute of Technology (KIT) analyses the economic, environmental and technological aspects of biomass and its conversion into second-generation liquid fuels, electricity and heat. It concludes that both bioenergy (heat, electricity) and biomass-to-liquids (BtL) production from wood and agriculutral residues in Germany is (1) competitive with fossil fuels, (2) energy efficient and (3) offers a sustainable and cost-effective way to reduce greenhouse gas emissions. A consortium affiliated with the KIT has meanwhile begun construction on the specific BtL facilities discussed in the report (earlier post).

The researchers found that synthetic biofuels (gasified biomass liquefied via the Fischer-Tropsch process) are competitive when oil is priced above $65 per barrel and the synfuels are not taxed. Depending on the capacity of the plants, production of electricity from the particular biomass sources analysed (forestry residues, straw) is close to competitive with coal when co-fired with coal or used in highly efficient combined heat and power (CHP) plants. Heat from the same biomass is most competitive and does not require any subsidies or tax-exemptions today to compete with heating oil (biomass being 30% less costly).

The most cost-effective way to reduce CO2 emissions is by using these types of biomass directly for the production of heat, followed by combined heat and power generation (CHP), co-firing biomass with coal, and electricity from gasified biomass. Fischer-Tropsch fuels were not effective in this regard, but have economic benefits as replacements for oil products and petrochemicals.

The report titled 'Kraftstoff, Strom und Wärme aus Stroh und Waldrestholz – Eine systemanalytische Untersuchung' [*.pdf] (Fuels, Electricity and Heat from Straw and Forestry Residues), written by scientists from KIT's 'Institut für Technikfolgenabschätzung und Systemanalyse' (ITAS) says the new bioconversion technologies sharpen competition amongst renewable energy technologies (especially wind and solar) but also within the biomass sector itself. This is so because biomass can be used for a large range of end-products: heat, electricity, aternatives to petrochemicals and transport fuels. This battle for investments will have positive effects on the sector as a whole and will result in the gradual emergence of the most efficient conversion pathways.

The biomass-to-liquids system analysed by ITAS - the so called 'bioliq' concept currently being implemented by the Forschungszentrum Karlsruhe - involves a three step process:

1. decentralised pyrolysis plants are located close to the biomass source (forests, agricultural zones), where it undergoes fast-pyrolysis resulting in 'pyrolysis slurry', a mixture of bio-oil and pyrolysis coke. This first step turns the bulky biomass into a raw product with a higher energy density, so it can be transported more efficiently to a central location for further processing (the study analyses both decentralised and centralised concepts). The researchers analysed the efficiency of 7 different fast-pyrolysis reactor types
   
2. the pyrolysis products arrive at a gasification facility, where they are turned into a carbon monoxide and hydrogen-rich gas (syngas); 5 gasification technologies were compared
   
3. after cleaning and conditioning the syngas, it is liquefied via the Fischer-Tropsch (FT) process (synthesis of hydrogen and carbon monoxide) into synthetic biofuels which can be further refined into a range of very clean transport fuels (alternatives to gasoline, diesel, kerosene, and dimethyl-ether and methanol obtained from natural gas); three types of FT-reactors were compared
   

The researchers analysed the specific advantages of using the dominant biomass sources – straw and wood residues – as well as the disadvantages of the technology, and compared the concept to competing alternative uses for biomass (heat and electricity).

As a starting point, selected plant locations were chosen in the federal state of Baden-Württemberg (southwest Germany), on the basis of which the volume of straw and wood residues available for energy use was outlined, as well as the supply costs for these biomass sources. The technology analysis regarding liquid fuel production from biomass entailed a detailed description of the present status quo of fast pyrolysis, gasification, gas cleaning/conditioning, and Fischer Tropsch synthesis.

Energy balance
The energy balance of the synthetic biofuels based on the bioliq concept in the specified setting, was found to be strong. For fuels obtained from straw the final net balance - after pretreating, drying, pyrolysing, gasifying, upgrading, liquefying and refining the feedstock - was 34%; for synfuels based on forest residues the net balance was 29% (graph, click to enlarge). The energy inputs that go into harvesting and transporting the biomass and the pyrolysis slurry, are between 5 and 12% of the energy content of the FT-fuels, depending on the concept (decentralized/centralized):
energy :: sustainability :: biomass :: bioenergy :: biofuels :: pyrolysis :: gasification :: Fischer-Tropsch :: biomass-to-liquids :: synthetic biofuels :: Germany ::

Economics
Assuming the combined use of straw and wood residues, the economic estimates for energy self-sufficient plants reveal that bio-based FT-fuels can be produced at costs in a range from €0.90 to 1.00 per litre, depending on plant capacity. The biomass supply accounts for 50-65% to the production costs of FT-fuel, depending on the assumed plant capacity. The economics of two biorefineries were analysed: a small one with a conversion capacity of 0.2 million tonnes of biomass per year and one with a 1 million tonne capacity. Compare this with an oil refinery which requires at least a 10 million tonne capacity to be commercially feasible. If the synthetic biofuels produced in the analysed refineries are not additionally charged with a mineral oil tax, they compete with fossil diesel at crude oil prices of $65/bbl.

Depending on the capacity of the plants, production of electricity from forestry residues and straw is close to competitive with coal when co-fired with coal or used in highly efficient combined heat and power (CHP) plants. Large CHP plants (10-67MWin) burning biomass offer heat and electricity in a more competitive than the fossil baseline. Small CHP plants (1.5-13.4MWel) are far less cost-effective. The costs for eletcricity obtained from gasification of the two types of biomass range from €80 to 135 per MWh, compared to a baseline of €50 for coal in a 500MWel plant.

The study shows that the production of heat from wood residues is already outcompeting fossil heating oil. Because straw and forestry residues have a 30% cost advantage over heating oil, this type of bioenergy does not require subsidies by the state (graph, click to enlarge).

In conclusion, in comparison of the production of FT-fuel with heat and electricity production reveals that these alternatives are closer to competitiveness or have already reached competitiveness in Germany.

CO2 offsetting costs
The CO2 mitigation costs (graph, click to enlarge) are lowest when biomass is used directly for the production of heat, in which case they can even be negative (when waste streams and residues are used that would otherwise require disposal costs). When used in efficient combined heat and power plants, they range between a negative cost and around €50 per Mg CO2 equivalent. Co-firing biomass with coal results in a CO2 offsetting cost of around €40.

Carbon prices would have to fetch between €35-140 to make electricity production from gasified biomass a cost-effective CO2 mitigation technology. The wide range depends on the gasification technology.

For biobased FT-fuels the mitigation costs are above €200 per Mg CO2 equivalent. These results suggest not using the CO2 mitigation strategy as a central argument for the promotion of synthetic fuel production from biomass. But because the BtL concept opens up new ways to use biomass as carbon carrier for other chemical purposes, this technological path will be pursued in any case by the KIT.


The proposed BtL technology is already being implemented by the Forschungszentrum Karlsruhe (FZK) and Lurgi AG, who have been testing a fast-pyrolysis pilot plant for the past two years. Both organisations are now building the gasification and liquefaction plant needed to perform the FT-stage of the production. The work is being supported by the Fachagentur Nachwachsende Rohstoffe (Agency for Renewable Materials, of Germany's Ministry of Agriculture, Food and Consumer protection).

The Karlsruhe Instituts für Technologie is a cooperation between the Forschungszentrum Karlsruhe und der Universität Karlsruhe. The study was commissioned by the Ministry for Food and Agriculture of the state of Baden-Württemberg.

Image: the fast-pyrolis plant at the FZK in Karlsruhe. Courtesy: Forschungszentrum Karlsruhe.

References:
L. Leible, S. Kälber, G. Kappler, S. Lange, E. Nieke, P. Proplesch, D. Wintzer und B. Fürniß, "Kraftstoff, Strom und Wärme aus Stroh und Waldrestholz – Eine systemanalytische Untersuchung" [*.pdf], Forschungszentrum Karlsruhe in der Helmholtz-Gemeinschaft, Wissenschaftliche Berichte, FZKA 7170, Institut für Technikfolgenabschätzung und Systemanalyse, Forschungszentrum Karlsruhe GmbH, Karlsruhe - [september] 2007

Biopact: German consortium starts production of ultra-clean synthetic biofuels - June 23, 2007

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EU/US biofuel organisations urge OECD to declare report as not reflecting official biofuels policy

The European Bioethanol Fuel Association (eBio) and the Renewable Fuels Association (RFA) are calling upon the Organization for Economic Cooperation and Development (OECD) to disavow a paper issued last week which is highly critical of ethanol produced in the US and the EU. The text, written as a working paper by the chair of the Round Table on Sustainable Development at OECD - an organisation that has no direct relation to the OECD -, explicitly states the document does not 'reflect the views of the OECD or the governments of its Member countries.' Yet, media reports are portraying the paper as the official position of OECD and have made a selective reading of the text.

Contrary to eBio and the RFA, Biopact welcomed the critical report because - for those willing to read it carefully - it gives a boost to the idea of a 'Biopact': produce biofuels in the Global South where the sector results in sustainable, highly efficient biofuels that effectively tackle climate change and can bring rural development on an unprecedented scale. Then allow these countries to export freely to the EU and the US, so that sustainable biofuels can replace the unsustainable ones currently being produced in the North. Biopact especially supports the authors in their call to abandon subsidies for inefficient EU/US biofuels and to scrap import tariffs on fuels produced in the South - a precondition for a successful pact.

Major organisations, including the UN's FAO (here), the International Energy Agency (here and here), the WorldWatch Institute (which even said biofuels can contribute to ending global malnourishment) and economists like Joseph Stiglitz now back the idea of such a trade relationship between the North and the South. Moreover, the UN's Industrial Development Organisation (UNIDO) and the African Union recently concluded that such a pact can help achieve the UN's Millennium Development Goals in Africa.

The text now being criticized by the European and American ethanol industry was a working paper written by Richard Doornbosch, principal advisor to the Roundtable and Ron Steenblik of the Global Subsidies Initiative, for an internal discussion on biofuels at a meeting of the Roundtable. It was (purposely) leaked to the press, who then picked it up and presented it as an official standpoint of the OECD, which it isn't. The report is critical of first generation biofuels produced in Europe and the U.S., but mainly positive about biofuels produced in the South, such as sugarcane ethanol.

The European and American ethanol industries - who stand to lose from a Biopact - are angry and call for a rectification. In a letter to OECD Secretary-General Angel Gurria, eBio Secretary General Rob Vierhout and RFA President Bob Dinner write:

Specifically and just as disturbingly, this potentially unauthorized document fails to make its case, is highly one-sided and seemingly conflicts with previous OECD positions supporting biofuels as a component in reducing CO2 gases.

In short, whether deliberate or not, the OECD’s imprimatur is on this document and it is the OECD that must now be accountable for what is a biased assessment of expanding the worldwide production and consumption of renewable biofuels.

We respectfully, but urgently, request that OECD specifically disavow this report as not reflecting the official policy of the organization.

Vierhout and Dinner say the paper released last week by a third-party, anti-ethanol website runs counter to statements made in official OECD publications.

Two years ago, the OECD Observer published an article stating, 'increasing the use of biofuels can improve energy security, greatly reduce greenhouse gases and many pollutant emissions, and improve vehicle performance. Their production can also enhance rural economic development.' This is a viewpoint shared by leading science and policy organisations like the UN's FAO and the WorldWatch Institute.

Additionally, an April 2004 official OECD Paper entitled 'Special Issue on Climate Change Climate Change Policies: Recent Developments and Long Term Issues' came to the conclusion that, 'Biofuels may also be used as a replacement for gasoline. In such a capacity they offer significant advantages for energy security as well as possible new potential for agricultural development.'

Moreover, according to eBio and the RFA the paper contains a large number of inaccuracies and omissions that call into question the validity of the findings. Notably:
sustainability :: energy :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: trade :: OECD ::

• While adopting the scare scenario about potential 'food shortages', the document fails to recognize the significant increases in productivity per acre. In the United States, for example, U.S. corn yields per acre have doubled over the last 30 years. More importantly, this has occurred with reduced inputs per acre.
• The document fails to reflect a realistic assessment of what is happening to the price of grains and other biofuel feedstocks. In Europe, for example, biofuel production consumes just 1.5% of grains. The price increases, however, are clearly based on a number of other factors in a worldwide market including: strong demand in China, a drought in Australia (an outcome of global warming many would argue) and speculation by investors.
• The document seems to ignore why OECD and other nations decided to pursue biofuels in the first place 'namely to reduce the consumption of oil which contributes mightily to global warming, whose major production areas are in the volatile Middle East and whose prices are controlled by an international cartel.'
• Implicit in this paper is a belief that the world can continue to rely on oil for its liquid fuel needs. But the world price of oil is now at $80 a barrel and will likely go higher given emerging market conditions. The incentives provided by OECD countries and others help level the playing field and encourage investors to finance a new and developing industry.
• The paper also overlooks all of the incentives that have been and continue to be provided to the production of oil. Without comparing the benefits received by oil producers, it is hardly a fair comparison to look at incentives for biofuels in an energy policy vacuum.
• Finally, the paper disregards the efforts that are currently being undertaken to set up efficient, effective and international standards on the sustainability of biofuels. Both unilateral (several EU member states) and multilateral (Roundtable on Sustainable Biofuels) initiatives hold promise for an international standard for sustainable biomass and biofuel production in the very near future safeguarding biodiversity and guaranteeing GHG savings.

In conclusion, Veirhaus and Dinneen wrote:

Based on the foregoing, Mr. Secretary-General, we urge you to publicly disavow the OECD’s support for this document; forcefully state that it was released by a third party and not by the OECD; that OECD governments strongly support and encourage the development of biofuels as one means of addressing the problems of global warming and energy security.

The complete letter can be found below.

Dear Mr. Secretary-General:

As representatives of the world’s ethanol producing industry, we are deeply concerned with the release of a publication by the Chair of the Round Table on Sustainable Development at the Organization for Economic Cooperation and Development (OECD) critical of worldwide development of biofuels.

This document was released not by the OECD on whose website this document cannot be found, but by a third party with an anti-ethanol agenda.

While containing the disclaimer that it is does “not necessarily reflect the views of the OECD or the governments of its Member countries,” this document has been described in the media as an OECD report (“Biofuel push damaging, disruptive, OECD says,” Globe and Mail, September 11, 2007).

Thus far, we have seen no official word from you or anyone else in authority at the OECD explaining that this report does not reflect OECD’s views or policies.

Specifically and just as disturbingly, this potentially unauthorized document fails to make its case, is highly one-sided and seemingly conflicts with previous OECD positions supporting biofuels as a component in reducing CO2 gases.

In short, whether deliberate or not, the OECD’s imprimatur is on this document and it is the OECD that must now be accountable for what is a biased assessment of expanding the worldwide production and consumption of renewable biofuels.

We respectfully, but urgently, request that OECD specifically disavow this report as not reflecting the official policy of the organization. Just two years ago the OECD Observer published an article stating, “increasing the use of biofuels can improve energy security, greatly reduce greenhouse gases and many pollutant emissions, and improve vehicle performance.

"Their production can also enhance rural economic development.”

While this article also raised questions regarding land use, impact on agriculture and food and cost, it concluded, “Given the benefits there is little wonder that many IEA countries, including the US, Canada, several European countries, Australia and Japan are considering, or have already adopted policies that could result in significantly higher biofuel use over the next decade.”

Finally, and quite importantly, the article concluded, “If all policies and targets are fully implemented, biofuel use could more than double worldwide over the next five years or so.

Even though that means an ethanol share of gasoline of only 4% or 5%, that would be a huge leap in a petroleum industry that has not faced real competition in over a century.”

Similarly, in April 2004 in an official OECD Paper, “Special Issue on Climate Change Climate Change Policies: Recent Developments and Long Term Issues” stated, “Transport systems in the latter half of this century could be dominated by vehicles, ships and aircraft with very low CO2 emissions.

"This scenario could feature a mix of vehicle types “ fuel-cell vehicles powered by hydrogen, electric vehicles, vehicles running on biofuels, and hydrogen-powered aircraft.

"The hydrogen, biofuels and electricity used in transport could be produced with near-zero well-to-wheel CO2 emissions.•

The report also stated, “Biofuels may also be used as a replacement for gasoline.

In such a capacity they offer significant advantages for energy security as well as possible new potential for agricultural development.”

What is so disappointing about the document released without apparent OECD approval is a failure to appreciate many of the changes that are rapidly taking place in the production, transportation and consumption of biofuels.

• While adopting the scare scenario about potential “food shortages,” the document fails to recognize the significant increases in productivity per acre. In the United States, for example, U.S. corn yields per acre have doubled over the last 30 years. More importantly, this has occurred with reduced inputs per acre.

• The document is devoid of any real analysis of the factors affecting food prices “ the most important of which is energy. In the US, the high cost of energy has had far more effect than a higher price for corn •“ by a margin of two to one.

"" The document fails to reflect a realistic assessment of what is happening to the price of grains and other biofuel feedstocks. In Europe, for example, biofuel production consumes just 1.5% of grains. The price increases, however, are clearly based on a number of other factors in a worldwide market including: strong demand in China, a drought in Australia (an outcome of global warming many would argue)

• In the United States, while the price of corn rose initially and peaked in January, it has since decreased by 40%. Why? Because market forces responded, farmers planted more corn and are expected to harvest a record crop.

• The document seems to ignore why OECD and other nations decided to pursue biofuels in the first place “ namely to reduce the consumption of oil which contributes mightily to global warming, whose major production areas are in the volatile Middle East and whose prices are controlled by an international cartel.

•Implicit in this paper is a belief that the world can continue to rely on oil for its liquid fuel needs. But the world price of oil is now at $80 a barrel and will likely go higher given emerging market conditions. The incentives provided by OECD countries and others help level the playing field and encourage investors to finance a new and developing industry.

• The paper also overlooks all of the incentives that have been and continue to be provided to the production of oil. Without comparing the benefits received by oil producers, it is hardly a fair comparison to look at incentives for biofuels in an energy policy vacuum.

• The claim that there are technological and economic problems with cellulosic or second-generation biofuels is particularly disturbing. The authors provide no support for their claims. They fail to acknowledge the existence of one company in the European Union and one in Canada that are already producing cellulosic ethanol or mention those in the US and the EU that are under construction.

• Finally, the paper disregards the efforts that are currently being undertaken to set up efficient, effective and international standards on the sustainability of biofuels. Both unilateral (several EU member states) and multilateral (Roundtable on Sustainable Biofuels) initiatives hold promise for an international standard for sustainable biomass and biofuel production in the very near future safeguarding biodiversity and guaranteeing GHG savings.

It is unfortunate that the OECD has allowed this publication to receive widespread media coverage at a time when countries around the world are seeking alternatives to the economic and environmental problems caused by oil dependence.

Brazil, the United States, the EU, Japan and other nations have recognized the importance of biofuels as one means of reducing global warming gases and strengthening energy security.

While we must have a balanced approach to developing new energy sources, especially renewable sources, we must also get the facts right.

Based on the foregoing, Mr. Secretary-General, we urge you to publicly disavow the OECD’s support for this document; forcefully state that it was released by a third party and not by the OECD; that OECD governments strongly support and encourage the development of biofuels as one means of addressing the problems of global warming and energy security.

With hopes for a more sustainable energy future, we are

Sincerely, Bob Dinneen Renewable Fuels Association

Rob Vierhout eBIO

References:
eBio: Renewable Fuels Association and EBio Urge OECD to Declare New Report as Not Reflecting Official Ethanol Industry Policy [*.pdf] - September 21, 2007.

Biofuels Digest: Widely quoted OECD anti-biofuels report report turns out to be … not from the OECD - September 14, 2007.

Biopact: Paper warns against subsidies for inefficient biofuels in the North, calls for liberalisation of market - major boost to idea of 'Biopact' - September 11, 2007

Biopact: Worldwatch Institute chief: biofuels could end global malnourishment - August 23, 2007

Biopact: FAO chief calls for a 'Biopact' between the North and the South - August 15, 2007

Biopact: Report: biofuels key to achieving Millennium Development Goals in Africa - August 02, 2007

Biopact: IEA chief: Europe and United States should import ethanol from developing world - October 16, 2006

Biopact: IEA chief economist: EU, US should scrap tariffs and subsidies, import biofuels from the South - March 06, 2007

Biopact: Stiglitz explains reasons behind the demise of the Doha development round - August 15, 2006

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Amazon forest showed unexpected growth during 2005 drought - contradicts major climate model

Researchers from the University of Arizona (UA) and the University of São Paulo announce they have made a surprising discovery: drought-stricken regions of the Amazon forest grew particularly vigorously during the 2005 drought. The counterintuitive finding contradicts a prominent global climate model that predicts the Amazon forest would begin to 'brown down' after just a month of drought and eventually collapse as the drought progressed.

Instead of ‘hunkering down’ during a drought as you might expect, the forest responded positively to drought, at least in the short term. It's a very interesting and surprising response. - Scott R. Saleska, lead author, University of Arizona.

Co-author Kamel Didan, a NASA-EOS MODIS associate science team member, adds that the big news is that the forest actually showed signs of being more productive. The study "Amazon Forests Green-up during 2005 drought" is online in the current issue of Science Express, the early-online version of the journal Science. The paper will be published in the October 26, 2007, issue.

This image shows how the Amazon forest canopy's 'greenness' differs from normal for the months of July-September 2005 (drought peak). The greenness data is derived from NASA-EOS MODerate Imaging Spectroradiometer (MODIS) sensor aboard Terra Satellite. Green indicates above normal vegetation productivity compared to the 2000-2006 average, red indicates below normal, and yellow corresponds to normal . The study area is highlighted over a true color image background from NASA-EOS MODIS sensor for South America. Credit: Kamel Didan, Terrestrial Biophysics and Remote Sensing Lab, The University of Arizona.

This image shows the spatial pattern of the 2005 drought peak (July – September) rainfall departure from normal. Red indicates severe rainfall reduction compared to the 1998-2006 normal, and blue corresponds to above normal rainfall. The precipitation data is derived from NASA's Tropical Rainfall Measuring Mission (TRMM satellite). The study area is highlighted over a true color image background from NASA-EOS MODIS sensor for South America. Credit: Kamel Didan, Terrestrial Biophysics and Remote Sensing Lab, The University of Arizona.

The 2005 drought reached its peak at the start of the Amazon's annual dry season, from July through September. Although the double whammy of the parched conditions might be expected to slow growth of the forest's leafy canopy, for many of the areas hit by drought, the canopy of the undisturbed forest became significantly greener - indicating increased photosynthetic activity.

Saleska, a UA assistant professor of ecology and evolutionary biology, and his colleagues at the UA and at the University of São Paulo in Brazil used data from two NASA satellites to figure out that undisturbed Amazon forest flourished as rainfall levels plummeted:
energy :: sustainability :: climate change :: global warming :: precipitation :: drought :: rainforest :: Amazon :: Brazil ::

No one had looked at the observations that are available from satellites, says Didan, an associate research scientist in the UA's department of soil, water and environmental science. The researchers took the opportunity of the most recent drought, the 2005 drought, to do so. A big chunk of the Amazon forest, the southwest region where the drought was severest, reacted positively.

The UA scientists and their Brazilian colleague already knew the Amazon forest took advantage of the annual dry season's relatively cloudless skies to soak up the sun and grow. The UA scientists and some other researchers had conducted previous research using satellite data in combination with field measurements and showed that intact Amazon forest increases photosynthesis, actually 'greening up' during the dry season.

However, no one had examined how the forest responded to a drought. The severe 2005 drought and the detailed, long-term observations from two NASA satellites - one that maps the greenness of vegetation, one that measures rainfall in the tropics - gave the researchers what they needed to see how the Amazon forest responds to a major drought.

The researchers used the month-to-month maps of changes in vegetation status across the Amazon available from the Moderate Resolution Imaging Spectroradiometer, or MODIS, carried by the Terra satellite, launched in 1999. The team gathered observations of rainfall in the Amazon from the Tropical Rainfall Measuring Mission spacecraft, launched in 1997.

The seven-to-nine years of observations from the satellites allowed the scientists to map 'normal' rainfall and greenness conditions in non-drought years. When the team compared those conditions to the same months of the 2005 drought, the researchers found that areas of Amazon's intact forests that had received below-normal rainfall in 2005 also had above-average greenness.

Global climate models predict the Amazon forest will cut back photosynthesis quickly when a drought starts. That slowdown in plant growth would create a positive feedback loop - as the forest shuts down more and more, it removes less and less carbon dioxide from the atmosphere. The CO2 ordinarily sequestered by growing trees would remain in the atmosphere, increasing global warming and further accelerating the forest's decline and additional CO2-fueled warming.

By contrast, the UA-led team's findings suggest the opposite happens, at least in the short-term. The drought-induced flush of forest growth would dampen global warming, not accelerate it. During the 2005 drought, Amazon forest trees flourished in the sunnier-than-average weather, most likely by tapping water deep in the forest soil. To grow, trees must take up carbon dioxide, thus drawing down the levels of atmospheric CO2. That negative feedback loop would slow warming from greenhouse gases.

Evolutionarily, the forest's resilience in the face of a single drought year makes sense, Saleska said. During El Nino, which occurs about every four to eight years, the Amazon forest receives significantly less rain than average.

The limit of the forest's resiliency is unknown, Saleska said, adding, that if you take away enough water for long enough, the trees will die.

Saleska and Didan's co-authors are Alfredo Huete, UA professor of soil, water and environmental science and NASA-EOS MODIS science team member, and Humberto Ribeiro da Rocha of the department of atmospheric science at the University of São Paulo in Brazil. The research was funded by NASA.

References:
Scott R. Saleska, Kamel Didan, Alfredo R. Huete, Humberto R. da Rocha,"Amazon Forests Green-Up During 2005 Drought", Published Online September 20, 2007, Science DOI: 10.1126/science.1146663

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DuPont launches non-transgenic high yield soybean varieties

DuPont announced it is commercializing soybean varieties developed using molecular breeding technology that increases yields by as much as 12 percent per acre. DuPont seed business Pioneer Hi-Bred is introducing five varieties with the technology for 2008 planting, pending wide-area product advancement trial results. Molecular breeding is a new way of plant breeding that allows much better and faster selection of elite plants, without the need for genetically modifying them.

The company officially launches one of the three soybean yield traits from its pipeline to commercial status. It will be commercially known as 'Accelerated Yield Technology' (AYT). AYT uses proprietary molecular breeding techniques to rapidly scan and identify genes that increase yield and then incorporate them into elite soybean genetics.

AYT allows us to take a giant step forward on our promise to deliver industry-leading improvements in soybeans. Our customers are seeing dramatic increases in Pioneer soybean variety yields that have never been seen in such a short period of time. This technology embodies our business philosophy to increase the productivity and profitability of our customers to help them meet the rising demand for food, feed, fuel and materials. - William S. Niebur, vice president DuPont Crop Genetics Research and Development.

Until now, molecular breeding techniques used by the seed industry have only produced single-gene defensive traits in commercial varieties. There are multiple genes in complex networks that determine the final yield level achieved. AYT builds upon DuPont industry-leading molecular breeding techniques by allowing researchers to simultaneously select multiple genes to significantly boost yields. AYT is not transgenic so soybeans developed from this process are not subject to additional regulatory approvals.

The first AYT varieties are higher yielding versions of the newest Pioneer elite soybean genetics. Pending final trial results this fall, Pioneer hopes to introduce an AYT version of Pioneer brand 94M80, which set the world record soybean yield of 139 bushels per acre (9.3 tons per hectare) in 2006. New unique genetics are also being developed using AYT and other molecular breeding techniques:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: biodiesel :: soybean :: molecular breeding ::

Full implementation of AYT combined with molecular breeding technologies will enable Pioneer to make a new class of soybeans that has unprecedented yield potential relative to anything we have ever seen. These technologies allow us to incorporate a complete package of offensive and defensive characteristics that could make 100-plus bushel soybean yields a common occurrence in the very near future. - William S. Niebur

Pioneer Hi-Bred, a DuPont Leaving Pioneer.com business, is the world's leading source of customized solutions for farmers, livestock producers and grain and oilseed processors. With headquarters in Des Moines, Iowa, Pioneer provides access to advanced plant genetics in nearly 70 countries.

Soybean is the world's largest oilseed crop, with a production of around 32 million tons of oil (2005), a 30% market share of the vegetable oil market. Major producers are the US, Argentina, Brasil and China. Soybeans contain around 20% of oil, which is increasingly used for the production of biodiesel.

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Scientists discover new anaerobic bacteria that feed on natural gas

A German-American research team of biologists and geochemists has discovered hitherto unknown anaerobic bacteria in marine sediments which need only propane or butane for growth, as reported by the scientific journal Nature in its current online issue.

The hydrocarbons ethane, propane and butane - as well as the main component, methane - are the major constituents of natural gas. Biological processes may lead to the degradation of these hydrocarbons in underground petroleum reservoirs and other geological habitats.

The bacteria isolated here for the first time from marine sediments use sulphate instead of oxygen for respiration and utilize propane and butane as their sole source of carbon and energy. These organisms are tough specialists that have become adapted to strictly utilising only these and no other substrates. - Heinz Wilkes, biogeochemist at GeoForschungsZentrum Potsdam

The investigations showed that the bacteria employ an unprecedented biochemical mechanism for transforming what are essentially unreactive hydrocarbons into reactive metabolites which may then be further oxidised to carbon dioxide. The findings concerning this reaction mechanism are an important step in designing new synthetic methods for selectively producing chemicals from hydrocarbons:
energy :: sustainability :: biomass :: petroleum :: natural gas :: methane :: propane :: butane :: anaerobic oxidation :: bacteria ::

The researchers report the enrichment of sulphate-reducing bacteria (SRB) with the capacity to utilizate short-chain hydrocarbons in an anaerobic environment. The organisms are found in marine hydrocarbon seep areas.

Propane or n-butane as the sole growth substrate led to sediment-free sulphate-reducing enrichment cultures growing at 12, 28 or 60 °C. With ethane, a slower enrichment with residual sediment was obtained at 12 °C.

Isolation experiments resulted in a mesophilic pure culture (strain BuS5) that used only propane and n-butane (methane, isobutane, alcohols or carboxylic acids did not support growth). Complete hydrocarbon oxidation to CO2 and the preferential oxidation of 12C-enriched alkanes were observed with strain BuS5 and other cultures.

Metabolites of propane included iso- and n-propylsuccinate, indicating a subterminal as well as an unprecedented terminal alkane activation with involvement of fumarate.

According to RNA analyses, strain BuS5 affiliates with Desulfosarcina/Desulfococcus, a cluster of widespread marine SRB. An enrichment culture with propane growing at 60 °C was dominated by Desulfotomaculum-like SRB. Our results suggest that diverse SRB are able to thrive in seep areas and gas reservoirs on propane and butane, thus altering the gas composition and contributing to sulphide production.

References:
Olaf Kniemeyer, et. al. "Anaerobic oxidation of short-chain hydrocarbons by marine sulphate-reducing bacteria", Nature advance online publication 19 September 2007, doi:10.1038/nature06200

Eurekalert: Natural gas inhabited by unusual specialists - September 21, 2007.

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Royal Society report: UK’s separated plutonium stockpile poses severe risks, enough for 17,000 nuclear bombs

Despite a global effort to push nuclear power as a 'safe' and 'clean' energy option, the risks posed by existing nuclear waste are so severe that, without urgent action, they might make the sector completely unacceptable in the future. This is the warning contained in a report published today by the Royal Society, the UK's national academy of science, in which it says that the potential consequences of a major security breach or accident involving the UK's stockpile of separated plutonium are so great that the British government must develop and implement a strategy for its long term use or disposal today.

The scientists propose a cap on all further separated plutonium production in the UK until existing legally binding contracts for safe disposal and reprocessing have been fulfilled. Of all European nations, the UK has the largest stockpile of weapons-usable civilian separated plutonium (graph shows amount for 2004, click to enlarge).

According to the Strategy options for the UK's separated plutonium [*.pdf] the UK's civil stockpile of separated plutonium is now over 100 tonnes - enough to make 17,000 nuclear bombs - and has almost doubled in the last 10 years. The UK's stockpile is largely the by-product of commercial reprocessing of spent fuel from UK power plants.

Plutonium is highly toxic. It is the primary component in most nuclear weapons and could be made into a crude nuclear bomb by a well-informed and equipped terrorist group.

The status quo of continuing to stockpile separated plutonium without any long term strategy for its use or disposal is not an acceptable option. The Royal Society initially raised concerns about the security risks nine years ago and we have not seen any progress towards a management strategy. Furthermore, the stockpile has grown whilst international nuclear proliferation and terrorist threats have increased. - Professor Geoffrey Boulton, chair of the report's working group

Just over 6kg of plutonium was used in the bomb which devastated Nagasaki and the UK has many thousands of times that amount. Professor Boulton stresses that Britain must take measures to ensure that this extremely dangerous material does not fall into the wrong hands.

The report analyses the security, health and environmental risks associated with the large stockpile. Of these, the risk for major security breaches is the most worrying:
energy :: sustainability :: climate change :: nuclear :: plutonium :: nuclear waste :: terrorism :: nuclear proliferation :: security :: United Kingdom ::

Security risks
The UK stockpile of separated plutonium poses three types of security risk:

• proliferation of nuclear weapons to other States through theft or illicit transfer of separated plutonium;
• construction of nuclear or radiological explosive devices by terrorists following the theft of separated plutonium;
• terrorist attacks on storage sites to disperse contained materials.

The first and second are both remote risks as agents of potential proliferating States or terrorist groups would have to steal plutonium from the well-guarded Sellafield site. Separated plutonium stores in some other countries are less secure and would be much easier to divert. It would appear that all of the separated plutonium at Sellafield is of reactor-grade, which poses design problems if used in stockpiled nuclear weapons.

The third probably offers the greatest risk to the current storage arrangements, provided precise knowledge of the location of the materials is available. Plutonium poses a toxic threat if dispersed in a fire or explosion, particularly whilst it remains in a powder form.

Although a direct or indirect attack with explosives or aircraft on the plutonium store at Sellafield could release separated plutonium into the atmosphere, a precise attack or a large explosion would be required to disperse the material. It will remain a potential but remote risk as long as the material remains in its current powdered form and location, and no long-term policy for its disposition is agreed.
The risks of terrorist attack or theft are difficult to estimate but they must be taken with the utmost seriousness.

The potential consequences of a major security breach are severe, and justify a strong and sustained policy to minimise risks.

Health risks
Plutonium emits alpha radiation making inhalation the most important pathway of occupational exposure. Lungs, bone and liver receive the largest doses from inhaled plutonium for both humans and animals. The dose to the lung following deposition depends on the physical and chemical properties of the plutonium compounds that have been inhaled. These properties determine how long the plutonium stays in the lung before it clears and is transferred to the blood.

Once in the bloodstream it is preferentially deposited in the liver and on bone surfaces and eventually in the volume of the bone. Animal experiments show that plutonium can cause cancers of the lung, liver and bone. It may also cause leukaemia but the evidence is less clear. Strict precautions against the possibility of accidents that could cause exposure, particularly via inhalation, must be enforced at all stages of plutonium handling. These are implemented through relevant UK regulation.

On the basis of laboratory data, the International Commission on Radiological Protection (ICRP) has drawn up protection guidelines for radiation workers. They are based on the best available data and are calculated using mathematical models of the behaviour of radioactive isotopes in the body. New guidelines will be issued by ICRP in 2007 but they will not affect the situation with regard to plutonium.

Plutonium can be handled safely wherever it is possible to maintain appropriate control of air quality and strict safety procedures are followed, as in most industrial operations. Under such conditions, human exposure to this potential radiation hazard to workers or the general population has been insignificant. However, if plutonium is released as a powder or vaporised it would constitute a major health hazard.

Human health impacts on plutonium workers can be summarized as follows:

Although many epidemiological studies have been carried out on humans exposed to radiation from plutonium most of them have not been robust enough to give useful quantitative information. There have been a number of studies examining cancer rates and radiation exposures, including Pu239, for workers at the Sellafield plant, UK Atomic Weapons Establishment, UK Atomic Energy Authority, as well as the Los Alamos Laboratory and Rocky Flats reprocessing plant in USA. They show no evidence of radiation-induced cancer of the lung or liver but the level of exposure of these workers was relatively low.

Recently data have become available on the health impacts due to plutonium exposure of workers at the Russian Mayak plant in the South Urals. This was a reprocessing facility for the Soviet nuclear weapons programme. Poor working conditions posed severe health hazards.

Although studies are still in progress, some preliminary conclusions are available. Risk estimates for lung and liver cancers are in good agreement with those derived for exposure to external radiation. The results are consistent with a linear relationship between dose and the occurrence of lung cancer. The results are also consistent with previous estimates of risk from earlier studies. There is also an elevated risk of both liver and bone cancer at body burdens greater than 7.4kBq but sufficiently reliable estimates of doses to these workers are not yet available and it is not possible to calculate risk estimates for these cancers.

Environmental risks
Relevant data for estimating the environmental effects of a catastrophic event at the separated plutonium store at Sellafield is likely to be found in studies of the Windscale fire in 1958; Chernobyl; and the potential effects on the local population of discharges from the reprocessing plants at Sellafield and, to a lesser extent, at Dounreay. Discharges to the air consist of gaseous and some volatile fission products and fine dust particles. Dilute washing liquids from the chemical processes are up to 1000 times more radioactive than discharges to the air. These liquids are discharged into the sea, where more than 90% of the plutonium discharge is incorporated into sediments close to the point of release.

Plutonium and other actinides are converted to insoluble forms, which are precipitated or deposited on suspended solid material. These insoluble plutonium compounds are slow to disperse and could be deposited on salt marshes or sea-washed pastures, or dispersed in marine sediment during storms. It is unlikely that anyone will receive a radiation dose greater than 1mSv per annum (the limit set for public exposure) from this source but the monitoring of relevant coastal regions will have to be continued.

Soluble radioactive isotopes, such as caesium, are dispersed in the sea and have been found in low concentrations throughout the Irish Sea and beyond.

Recommendations
The report recommends that a strategy to manage the UK's separated plutonium must be considered as an integral part of the energy and radioactive waste policies that are currently being developed.

According to the Royal Society's report, the best option is to convert the plutonium into the most stable and secure form spent nuclear fuel by turning it into Mixed Oxide (MOX) and using as fuel in nuclear reactors. This would make it more difficult to steal because spent fuel is more radioactive and therefore harder to handle than plutonium and more difficult to use in nuclear weapons because it would need to be reprocessed first.

If the British overnment decides to build a new generation of nuclear power stations then the entire stockpile could be burnt as MOX fuel in these new reactors.

If there is no new nuclear build, at least some of the stockpile could be transformed into spent fuel by modifying Sizewell B to burn MOX fuel. However because of the limited life time of Sizewell B, not all the stockpile could be burned. The report recommends that the remaining separated plutonium should be converted and stored as MOX fuel pellets. These pellets would make the plutonium more secure than it is currently, but less safe than spent fuel.

In the long term the best method of disposing of the UK's separated plutonium stockpile will be to bury it deep underground in the form of spent fuel, or, less ideally, MOX pellets. It is essential that the British government's strategy for developing such a repository for nuclear waste includes an option for the disposal of separated plutonium and materials derived from it.

However the report stresses the urgency of the government developing a strategy for dealing with separated plutonium in the meantime since, according to the Nuclear Decommissioning Authority, disposal sites for high-level waste may not be ready until around 2075.

Graph: National Stocks of Weapons and Separated Civilian Plutonium. By the end of 2004, the global stockpile of separated plutonium was about 500 tons. This was divided approximately equally between weapons and civilian stocks. Numbers for military stocks are estimates. All separated plutonium can be used for the production of nuclear weapons. Credit: International Panel on Fissile Materials.

References:
The Royal Society: Strategy options for the UK’s separated plutonium [*.pdf]- September 21, 2007.

The Royal Society: UK’s separated plutonium stockpile poses severe risks warns Royal Society - September 21, 2007.

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Inflation in Brazil decreased more than expected on lower ethanol, food prices

Quicknote biofuels and the economy
Brazil's main inflation indicator slowed more than expected from mid-August to mid-September, with ethanol's lower price being a key driver of the downward move. Prices for gasoline and phone calls fell slightly, while the growth rate in the cost of major food products eased, government data show.

The IPCA-15 inflation index [*Portuguese] published by the Instituto Brasileiro de Geografia e Estatística, rose 0.29 percent in the month to mid-September, slowing from a 0.42 percent increase in the month through mid-August.

The inflation figure was lower than the 0.41 percent median forecast of 30 economists surveyed. The estimates ranged from 0.32 percent to 0.47 percent.

Food prices, a nagging pressure on inflation the past several months, contributed strongy to the slowdown in the IPCA index, the IBGE said, rising 0.87 percent compared with a 1.61 percent gain in the previous month.

Ethanol dropped 2.08 percent and phone rates fell 0.92 percent, also helping slow the inflation rate. Gasoline prices fell 0.86 percent:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: inflation :: Brazil ::

In the 12-month period through mid-September the IPCA index rose 4.2 percent compared with a 3.95 percent increase in the year through mid-August, the IBGE said.

Amongst the regional indices, the greatest rise in the IPCA-15 was for Recife (+0,69%), where the price for a liter of the gasoline rose by 7.66%. Goiânia (-0,08%) noted the sharpest drop in September.

The so-called IPCA-15 tracks prices from around the 15th of one month to the 15th of the next. The central bank, which has an inflation target this year of 4.5 percent, uses the IPCA as a guide when setting interest rates:

References:
Instituto Brasileiro de Geografia e Estatística: IPCA-15 fica em 0,29% em setembro - September 21, 2007.

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Study: some first-generation biofuels could contribute to global warming because of N2O emissions

Yet another argument in favor of a Biopact with the South. A new study led by Paul Crutzen, winner of a Nobel Prize in Chemistry in 1995 for work on the formation and decomposition of ozone in the atmosphere, re-examines [*.pdf] the total emission of nitrous oxide (N2O) from crop production and concludes that growing and burning first-generation biofuel crops like corn and rapeseed may actually raise, rather than lower, net greenhouse gas emissions. Crops grown in the South, like sugarcane and other grasses, retain their climate change reducing potential and are a positive alternative to conventional fuels.

N2O is a by-product of fixed nitrogen application in agriculture and is a greenhouse gas with a global warming potential (GWP) 296 times larger than an equal mass of CO2.

Crutzen and his colleagues calculated that growing the most commonly used biofuel crops - rapeseed and corn - releases around twice the amount of N2O than previously thought, thereby wiping out any benefits from not using fossil fuels and potentially contributing to global warming. Crops like sugarcane and grasses have a far better balance (table, click to enlarge).

Note that Crutzen did not take into account the production of carbon-negative biofuels based on the geosequestration of CO2 - but this concept is in an experimental stage and has not yet reached broader scientific circles (earlier post and here for a feasibility study). Still, the findings are important for future life cycle analyses of biofuels:

When the extra N2O emission from biofuel production is calculated in “CO2-equivalent” global warming terms, and compared with the quasi-cooling effect of “saving” emissions of fossil fuel derived CO2, the outcome is that the production of commonly used biofuels, such as biodiesel from rapeseed and bioethanol from corn (maize), can contribute as much or more to global warming by N2O emissions than cooling by fossil fuel savings. Crops with less N demand, such as grasses and woody coppice species have more favourable climate impacts. This analysis only considers the conversion of biomass to biofuel. It does not take into account the use of fossil fuel on the farms and for fertilizer and pesticide production, but it also neglects the production of useful co-products. Both factors partially compensate each other. This needs to be analyzed in a full life cycle assessment. - P. J. Crutzen

The significance of it is that the supposed benefits of biofuels are even more disputable than had been thought hitherto. What we are saying is that growing many biofuels is probably of no benefit and in fact is actually making the climate issue worse. - Keith Smith, co-author, atmospheric scientist from the University of Edinburgh

The work is currently subject to open review in the journal Atmospheric Chemistry and Physics. Crutzen has declined to comment until that process is completed. The paper suggests that microbes convert much more of the nitrogen in fertilizer to nitrous oxide than previously thought—3 to 5 percent, compared to the widely accepted figure of 2 percent used by the International Panel on Climate Change (IPCC) to calculate the impact of fertilizers on climate change:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: life cycle analysis :: emissions :: nitrous oxide :: climate change ::

For rapeseed biodiesel, which accounts for about 80 percent of the biofuel production in Europe, the relative warming due to nitrous oxide emissions is estimated at 1 to 1.7 times larger than the relative cooling effect due to saved fossil CO2 emissions. For corn bioethanol, dominant in the US, the figure is 0.9 to 1.5. Only sugarcane bioethanol—with a relative warming of 0.5 to 0.9—looks like a better alternative to conventional fuels.

As release of N2O affects climate and stratospheric ozone chemistry by the production of biofuels, much more research on the sources of N2O and the nitrogen cycle is urgently needed...Here we concentrated on the climate effects due only to required N fertilization in biomass production and we have shown that, depending on N content, the use of several agricultural crops for energy production can readily lead to N2O emissions large enough to cause climate warming instead of cooling by “saved fossil CO2”. What we have discussed is one important step in a life cycle analysis, i.e. the emissions of N2O, which must be considered in addition to the fossil fuel input and co-production of useful chemicals in biofuel production.

We have also shown that the replacement of fossil fuels by biofuels may not bring the intended climate cooling due to the accompanying emissions of N2O. There are also other factors to consider in connection with the introduction of biofuels. We have not yet considered the extent to which the high percentage of N-fertilizer which is not taken up by the plants, and the organic nitrogen in the harvested plant material, may stimulate CO2 uptake from the atmosphere; estimates for this effect are very uncertain. We conclude, however, that the relatively large emission of N2O exacerbates the already huge challenge of getting global warming under control. - P. J. Crutzen et al.

References:
P. J. Crutzen, A. R. Mosier, K. A. Smith, and W. Winiwarter. "N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels" Atmos. Chem. Phys. Discuss., 7, 11191-11205, 2007.

AlphaGalileo: Biofuels could increase global warming with laughing gas, says Nobel prize-winning chemist - September 21, 2007

Biopact: A closer look at the revolutionary coal+biomass-to-liquids with carbon storage project - September 13, 2007

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Experts: Brazil victim of its own biofuels success, as ethanol price collapses

Can ultra-cheap fuel be a problem when the rest of the world suffers under record oil prices? It seems so. As consumers across the world feel the pinch when filling up their tanks with expensive gasoline, in Brazil experts are worried that ethanol is becoming too cheap too quickly. Record low sugar and ethanol prices are the result of overproduction and have been fueling the debate on how this will affect future investments and growth in the country's biofuels industry.

Sugar and ethanol prices have fallen around 35 percent since the beginning of the record 2007/08 cane crop and output is set to grow further with tens of new projects being implemented. For Brazil, there is only one way out: international exports. This requires the creation of a global ethanol market and an abandonment of current tariffs and non-tariff trade barriers. But governments in both the US and the EU prefer to protect their own farmers and refuse to give their consumers access to more sustainable and far cheaper fuels. Brazil now faces a catch-22: the local market is saturated, and an international market does not yet exist. Experts convened in Sertaozinho to debate the crisis.

I think there still isn't any international ethanol market. We're all working irrationally. There isn't any strategy either from the private sector or from the government. How much ethanol do we want to produce? Nobody knows. But the potential market is huge. - Roberto Rodrigues, director for the Inter-American Ethanol Commission

According to professor Luis Cortez (State University of Campinas), in theory, Brazil can replace all the world's current gasoline needs with ethanol, but this requires massive investments (earlier post and map, click to enlarge). The problem is that these investments are flowing in, but are putting the Brazilian ethanol sector on a faster growth track than is commercially reasonable, with collapsing prices as a consequence, says Plinio Nastari, president of Datagra consultancy. Projected investments in new mills are estimated to be around 17 billion reais (€6.5/US$9.1 billion), but the market suffers from poor regulatory structure and a lack of long-term planning to cope with this rush.

With expected demand for 720 million tonnes of cane by 2013/14, the sector should not grow more than 7.3 percent per year to avoid worsening the current oversupply, Nastari said. But Brazil's cane crop has risen an average of 9.9 percent each year since 2000, boosted by increasing ethanol demand.

Datagro projected demand for cane is currently higher than predicted by the consultancy a few years ago, but investments in new mills have surpassed what was forecast even more and are at an excruciatingly high level. There are 138 new ethanol projects on the table in Brazil. 79 of these are highly likely to be build, for 30 construction is moderately probable, while only 29 will not likely go beyond the planning stage:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: trade :: tariffs :: sugar cane :: ethanol :: oversupply :: Brazil ::

Sugar and ethanol prices have fallen around 35 percent since the beginning of the 2007/08 cane crop, and the drop's effect on the industry is raising concerns also in government.

Manuel Bertone, Production and Agroenergy Secretary in the Agriculture Ministry, said the disorganized way the market is growing will not be in line with the rise in demand, which could lead to even lower prices.

The market will not grow if we do not organize all parts of the production chain a way to keep security and stability (in supply). Besides that, if we do not have a regulatory basis, possibly no country will buy ethanol from us. - Manuel Bertone, Production and Agroenergy Secretary in the Agriculture Ministry

Bertone ruled out intervention in the sector but defended a dialogue between producers and the government. In order to develop the market Brazil needs to increase output faster than demand. But this will come at a heavy cost, already seen today: low prices. Bertone added that the biofuels market abroad is an extremely controlled market that would be hard to enter.

The launch of flex fuel vehicles in 2003 made it harder for analysts and producers to make demand projections, as consumption in this case depends totally on the relation between ethanol and gasoline prices. Normally, if the biofuel is 30 to 40 percent cheaper at the pump than gasoline, ethanol is a better option for flex-fuel car owners.

References:
CheckBiotech: Brazil ethanol sector fears 'delirious' growth - September 20, 2007.

Biopact: World sugar prices keep falling, despite ethanol boom - July 22, 2007

Biopact: Brazilian biofuels can meet world's total gasoline needs - expert - May 21, 2007

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Report: U.S. ethanol sector does not need subsidies

The ethanol industry in the United States is booming and has achieved an impressive scale over the past two years. However, many critics have said this growth has come at a high cost for the American tax payer: the cost of all the tax breaks, direct subsidies and other benefits for corn-derived ethanol was estimated to total at least $5.1 billion last year (earlier post). Moreover, the sector is proteced by import tariffs on cheaper and more sustainable ethanol made in the developing world. Recently, a paper written for the 'OECD Roundtable on Sustainable Biofuels' (not affiliated with the OECD) warned that these subsidies are not effective, and that trade barriers prevent more sustainable and competitive biofuels from reaching the market (more here).

However, a new study by Dr Thomas Elam, agricultural economist for consulting firm FarmEcon, now shows that this heavy federal support is in fact not needed. The report titled "Fuel Ethanol Subsidies: An Economic Perspective" [*.pdf], states that with current oil prices, even America's corn-based ethanol, which is amongst the most costly biofuels, can survive without subsidies.

Ethanol is one of the most profitable enterprises in the United States today, but unfortunately a high percentage of those current profits come not from the marketplace, but from the federal treasury. Increased energy prices make it possible for the ethanol industry to thrive on its own. - Dr Thomas Elam, agricultural economist

In the chart above (click to enlarge) the breakeven ethanol value of corn is calculated based on the energy value of ethanol, current ethanol production costs, current ethanol yields and the current relationship between corn prices and distiller's dried grains with solubles (DDGS) prices. The chart uses the historic relationship between crude oil and U.S. wholesale gasoline prices to relate the value of gasoline to the value of crude oil.

At current crude oil and gasoline price levels coupled with the Federal subsidy the ethanol industry can afford to pay about twice the 2003-2005 average price of corn. As long as oil remains above $55 per barrel, and more importantly wholesale gasoline above about $1.90 per gallon, ethanol producers can pay more than 2003-2005 corn prices. If crude oil were to go to $90 per barrel corn would be affordable to ethanol producers at up to $6.00 per bushel, including the Federal subsidy.

According to the report, this shows clearly that the case can be made that the subsidy for ethanol, if there is to be one at all, should be based on gasoline prices, not a flat amount per gallon of ethanol used for fuel. In fact, if oil prices go high enough the government should consider taxing ethanol used for fuel to alleviate the effects of ethanol demand on food prices:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: subsidies :: tax breaks :: corn ::

According to Elam's study, federal supports, when fully implemented, will drive up the cost of corn and other grains by $34 billion per year. The ethanol boom is driving up the cost of food production, and could eventually cost a family of four about $460 a year in higher food costs.

Federal supports are severely distorting crop prices while adding little, if anything, to the stated goals of the renewable energy program, Elam said. The ethanol program is also increasing the federal outlays and has very little impact on U.S. dependence on foreign oil, the report says.

The study also contends that increased ethanol production will do little to reduce domestic dependence on foreign oil:

On a net energy basis, ethanol will not make a significant contribution to overall U.S. energy production/ If the ethanol industry achieves 100 percent E10 market share in the United States, it would take about 200 million tons of corn annually. This is equal to a 10 percent reduction in the current global grain supply. - Dr Thomas Elam, agricultural economist

The 51 cents per gallon tax credit given to fuel blenders who add ethanol to gasoline has caused significant increases in food costs and distorting farmer planting incentives, the report says.

Ethanol producers can easily afford to compete with U.S. livestock and poultry producers for corn. Even without subsidies, ethanol production would be expanding at a significant rate due to high gasoline prices and the improvements in ethanol production technology in recent years. - Dr Thomas Elam, agricultural economist

The American Meat Institute, National Chicken Council and National Turkey Federation commissioned Elam's study.

References:
Elam, Thomas, "Fuel Ethanol Subsidies: An Economic Perspective" [*.pdf], Report commissioned by The National Turkey Federation, National Chicken Council, American Meat Institute - September 19, 2007.

Biopact: Subsidies for uncompetitive U.S. biofuels cost taxpayers billions - report - October 26, 2006

Biopact: Paper warns against subsidies for inefficient biofuels in the North, calls for liberalisation of market - major boost to idea of 'Biopact' - September 11, 2007

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University of Tennessee and Mascoma team up to build cellulosic ethanol biorefinery

The University of Tennessee and Mascoma Corporation plan [*.pdf] to jointly build and operate a 5 million gallon per year cellulosic ethanol biorefinery in Monroe County.

The principal product of the facility will be cellulosic ethanol derived from non-food biomass, like grasses such as switchgrass, wood chips and other cellulosic materials.

Switchgrass
Because it does not compete with food or feed uses, using dedicated energy crops like switchgrass to produce cellulosic biofuels on marginal crop land is widely seen as the answer to producing affordable, domestic, renewable fuel without raising food or feed costs.

When operating at full capacity, the facility will require 170 tons per day of switchgrass and other agricultural and forest biomass. An $8 million farmer incentive program is under development to encourage local production of this new energy crop, switchgrass.

The comprehensive switchgrass program includes direct payments to farmers in advance of an established market for switchgrass. Participating farmers will receive high quality switchgrass seed for planting, as well as research and technical support related to switchgrass production.

Consolidated bioprocessing
Mascoma's focus is on genetically engineering thermophilic ethanol-producing bacteria in order to facilitate the transition of cellulose ethanol processing to a Consolidated Bioprocessing (CBP) configuration. CBP comes down to reducing the number of biologically mediated bioconversion steps into a single process. It is widely recognized as the simplest, lowest cost configuration for producing cellulosic ethanol.

Mascoma’s lead organism for thermophilic 'Simultaneous Saccarifi