The agreement includes the construction of a plant within 14 months in the province Azua (south) to use oil from native varieties of brush such as jatrofa and higuereta, which haven’t any use so far since the oil they produce is toxic.

The agreement includes the Surfuturo Foundation, which will promote the establishment of plantations in the country’s poorest region, with the guarantee for farmers who raise the crops to be bought by the future plant.

Globasol executive Jose Vicente Galindo said the plant’s maximum production of 100,000 tons per year would require plantations totaling 60,000 hectares.

Attending the signing ceremony were Spain ambassador Diego Bermejo and Asturias region president Vicente Alvarez Areces, who concludes his first official visit to the country today.

 SOURCE: DOMINICAN TODAY

Braskem expects to become the first commercial-scale producer of polyethylene made from a renewable source when a plant in Brazil begins producing the building block resin used in plastics at the Triunfo plant, said Leonora Novaes, Braskem’s commercial head for green polyethylene.

A second plant is likely to follow, if manufacturers show sufficient interest in the plastic, which will have the same characteristics as petroleum-based polyethylene but help reduce greenhouse gasses and meet consumer demand for more environmentally friendly products.

A new plant would take about three years to build.

The firm is studying possible locations for a second plant, including real estate in the center-south’s sugar cane heartland to have ready access to ethanol, the plastic’s raw material.

Ethanol will have to be transported over a long distance to reach the Triunfo plant in Rio Grande do Sul, Brazil’s southernmost state.

“Cane (ethanol) brings many advantages. Cane is very efficient at capturing CO2 in the growth process,” Novaes said in a presentation on the product at the opening of the three-day FO Licht Sugar and Ethanol Conference in Sao Paulo.

The firm has committed to selling 50,000 tonnes of the green plastic to Toyota (8015.T), a quarter of the 200,000 tonnes the Triunfo plant will produce initially.

Novaes said European firms had shown keen interest in the product and Braskem expected to export to the United States.

Demand appeared limited on the domestic market so far.

“It’s still a niche,” said Novaes, who said the 200,000 tonnes was less than 1 percent of total global polyethylene consumption. (Reporting by Peter Murphy; Writing by Reese Ewing; Editing by Walter Bagley)

Source: Reuters

SAO PAULO (Reuters) – Royal Dutch Shell plans to form an ethanol and fuel distribution joint venture worth up to $12 billion with Brazilian sugar and biofuel giant Cosan, becoming the latest global energy company to buy into one of Brazil’s fastest-growing industries.

The deal, announced on Monday, marks Shell’s first foray into ethanol production and follows moves by British oil company BP, which in 2008 took a stake in a big Brazilian biofuel project and unveiled $1 billion in investments.

Cosan shares jumped 12 percent in Sao Paulo, compared with a 1.1 percent gain by the benchmark Bovespa index. Shell shares rose 1.1 percent in London, outperforming a 0.3 percent rise in the Dow Jones European oil and gas index.

“It’s a vote of confidence from an oil major for the Brazilian ethanol industry,” said Jonathan Kingsman, managing director of the Lausanne-based Kingsman SA ethanol and sugar consultancy. “I expect more interest from the oil companies in Brazilian ethanol, both in production and distribution.”

The 50-50 joint venture will be the third-largest fuel distributor in Latin America’s largest country, with almost 4,500 filling stations nationwide. By joining forces, Cosan and Shell will be better positioned to compete with the two top players in the market, state oil giant Petrobras and Ipiranga, a unit of Brazil’s Grupo Ultra.

Cosan first branched out into the fuel distribution business in 2008 when it acquired U.S.-based Exxon Mobil Corp’s Esso chain of service stations for nearly $1 billion. Cosan also agreed in December to buy a local chain of filling stations called Petrosul for an undisclosed sum.

While the deal will not immediately add to Cosan’s existing cane crushing capacity of about 60 million tonnes a year, it will give it a deep-pocketed partner at a time when some of its smaller rivals are vulnerable to takeovers.

The companies hope to more than double ethanol output to up to 5 billion liters a year from about 2 billion now, Shell’s downstream director, Mark Williams, said in London, without giving a time frame. The increase would come from takeovers and organic growth, he added.

The deal is another feather in the cap of Cosan Chairman Rubens Ometto, whose family has been in the sugar business since 1936. On Ometto’s watch, Cosan went on an acquisition spree and expanded into fuel distribution and port terminals.

Ometto hopes to capitalize on Shell’s global clout to make ethanol a widely traded commodity.

“Brazil’s aim is to become an ethanol exporter. Shell has distribution facilities throughout the world that we could use in a much more integrated way,” Ometto said in Sao Paulo.

“This step will be very important to consolidate ethanol as a clean and renewable fuel … and help it become a global commodity.”

Oil companies and major global investors have been searching for partnerships in Brazil’s promising ethanol sector, which is still largely dominated by family companies with complex ownership structures.

Shell has been looking for opportunities in Brazil’s ethanol industry for years. About 90 percent of all new cars in Brazil are flex-fuel, running on any mix of ethanol and gasoline, making the country a huge market for biofuels.

Other foreign companies have also been delving into Brazil. U.S. agribusiness giant Bunge Ltd struck a deal in December to buy sugar and ethanol producer Moema for $452 million, while French commodities company Louis Dreyfus said in October it would take over the Santelisa Vale mill for an undisclosed sum.

COSAN EYES OVERSEAS MARKETS, TECHNOLOGY

The combined entity will have about 40 billion reais ($21.4 billion) in annual sales, Cosan Chief Financial Officer Marcelo Martins said on a conference call with analysts and investors.

For Cosan, the world’s largest sugar and ethanol producer, teaming up with Shell could give it access to a vast overseas distribution network and new technologies in ethanol production, an area where Shell has been investing. Shell’s network may help Cosan export more ethanol as output grows.

“We’ll have a partner with an absolutely huge international presence in fuels sales,” Martins said.

The so-called second-generation in ethanol production has yet to reach commercial scale, but some companies are betting on the use of cellulosic material such as bagasse or cane stalks and grasses to make biofuels, in part to move away from making fuel from foodstuffs.

Cosan, which recently obtained a court injunction to remove its name from a government black list of companies with workers in slave-like conditions, said it had 180 days to discuss the nonbinding memorandum of understanding exclusively with Shell International Petroleum Co Ltd.

As part of the transaction, Cosan will transfer its sugar, ethanol, fuel distribution and energy generation business to the merged entity, with assets valued at $4.93 billion and debt of $2.52 billion.

Shell will contribute its retail fuel and aviation distribution business, valued at up to $3 billion, and inject $1.63 billion into the merged company in up to two years.

Brazilian investment bank BTG Pactual advised Cosan on the transaction, while JPMorgan Chase advised Shell.

Cosan and Shell will have the option of buying each other’s stake in the venture after 10 years, with the price to be determined at the time of purchase.

Earlier on Monday, Cosan released its quarterly earnings for the three months ended December 31. It posted net income of 167.1 million reais, up sharply from 5.2 million reais a year earlier. ($1=1.87 reais)

Reporting by Elzio Barreto and Inae Riveras; additional reporting by Reese Ewing in Sao Paulo and David Brough, Nigel Hunt and Tom Bergin in London; editing by Todd Benson, Dave Zimmerman and John Wallace.

Source:  Reuters

State-run oil giant Petrobras (PETR4.SA)(PBR.N) and General Electric Co (GE.N), which helped design the plant, are betting that increased use of ethanol generation by green-conscious countries will boost demand for the product.

Brazil, the top global ethanol exporter, is already in talks with Japan to develop biofuels power generation there.

“We have great expectations to show the viability and economy of generating electricity from … an alternative feedstock to fossil fuels,” Maria das Gracas Foster, head of Petrobras’ natural gas division, said.

Petrobras with the help of GE upgraded the 87-megawatt power plant to switch between running on natural gas or ethanol instantaneously. Brazil primarily relies on hydroelectric power but needs backup thermoelectric generation during the dry season.

John Ingham, Latin America Products Director for GE, said tests showed switching the plant to ethanol reduced carbon dioxide emissions without lowering energy output.

GE has around 770 turbines like those used in the Juiz de Fora plant, including many in Japan, that could be converted to run on ethanol, he said.

“A plant like that consumes a lot of ethanol, so it has to be in a place that makes sense (such as) places that have no access to gas, like Japan, some islands, or places that depend heavily on diesel like the Amazon region,” he said.

Brazil is expected to produce a record 27.8 billion liters of ethanol in the 2009/2010 season. It began its biofuels program 30 years ago and now mandates a minimum 20 percent of ethanol in gasoline.

Petrobras itself is only starting to enter the ethanol market. Brazil’s ethanol production comes from sugar cane milled by companies such as Cosan (CZZ.N) or commodities giants including Cargill Inc [CARG.UL], Bunge (BG.N) and ADM Co (ADM.N).

Domestic demand for ethanol is being driven by the popularity of the flex-fuel car technology that was launched in 2003 and now makes up around 90 percent of new vehicle sales. (Writing by Brian Ellsworth; Editing by Marguerita Choy).

By Denise Luna

Source: Reuters

Moema Par is a holding company that owns one sugarcane mill and has ownership in five others. Together the six mills, known as the Moema Group, have the capacity to crush 15.4 metric tons. This agreement, which is structured as a share exchange worth approximately $896 million, gives Bunge 60 percent effective share of the total capacity.

“This transaction fulfills Bunge’s strategic goal of building a large-scale, fully integrated business in sugar and bioenergy,” stated Alberto Weisser, Chairman and CEO of Bunge Limited. “It adds significant scale to our current milling operations and enables us to vary production among multiple sugar and ethanol products, according to market conditions. The Moema Group cluster is also strategically located near large domestic markets in Brazil and has excellent access to export logistics systems. All of these strengths make it a perfect fit with our global trading and marketing operations.”

The Moema Group cluster is located on the border of São Paulo and Minas Gerais states, the two largest domestic ethanol markets in Brazil. According to Bunge, the mills benefit from cost savings due to their cluster configuration, and have favorable road and rail access to three of Brazil’s largest export ports (Santos, Paranagua and Vitoria). The mills can produce both raw and crystal sugar, as well as hydrous and anhydrous ethanol. In addition, the mills have co-generation facilities, are self-sustaining in terms of energy requirements and sell excess power to the grid. The majority of the cluster’s sugarcane is harvested mechanically, which is now law in São Paulo.

According to Bunge, they may enter into agreements to secure some of all of the remaining interests in the mills that comprise the Moema Group in the next few weeks.

Source: Domestic Fuel

Update incorporates feedback from five regional consultations and addresses concerns regarding food security, indigenous peoples and biodiversity preservation.

The Inter-American Development Bank has released a new version of its Biofuels Sustainability Scorecard, which will enable users to better anticipate the impacts of potential biofuel projects on sensitive issues such as indigenous rights, carbon emissions from land use change, and food security. 

The first version of the Scorecard, an interactive, web-based tool that was released a year ago, addressed 23 key variables including greenhouse gas emissions, water management, biodiversity and poverty reduction. The IDB subsequently held five regional meetings to solicit feedback on the Scorecard and began collecting and reviewing hundreds of comments and suggestions submitted by outside experts.

As a result, the updated version of the Scorecard includes new categories to more thoroughly capture the environmental and social dimensions of biofuels investments. Specifically, there are six new social categories that address issues relating to indigenous people, local grower arrangements and impacts on food security, among others.

“This new version of the Biofuels Sustainability Scorecard reflects the wisdom and experience of a wide spectrum of experts in academia, NGOs, multilateral institutions and the investment community,” said IDB President Luis Alberto Moreno. “Biofuels continue to be a compelling energy alternative for many Latin American and Caribbean countries, but it is essential to understand the full lifecycle impacts of a project first. This Scorecard now offers an even more effective way to ensure that proposed biofuel projects are truly sustainable.”

The new version of the Scorecard includes a spatial analysis tool that enables users to quickly access existing Geographic Information System (GIS) data regarding areas for biodiversity preservation. Future versions will add data layers to show the spatial dimensions of categories including water scarcity, cultural sites and high carbon sequestration areas, among others.

User feedback. The new Scorecard also benefitted from the criticisms and suggestions of investors who used the original version. These included the financial backers of Biobahia Oil, a large biofuel complex planned for Northeastern Brazil.

Euroventures, the company behind the project, was finding it difficult to determine the full social and environmental impacts of this ambitious project, which aims to cultivate some 30,000 hectares of land and produce 200,000 tons of biodiesel per year. So Adrian Calvert, in charge of investors’ relations at the company, sought technical assistance for a feasibility study from the IDB’s Sustainable Energy and Climate Change Initiative.

In agreeing to help, IDB experts urged the Biobahia team to run their project through the Scorecard.

“In an increasingly competitive biofuels industry, sustainability has become the key issue in ensuring access to global markets,” said Guillaume Sagez, managing partner of Euroventures. “The IDB Biofuels Sustainability Scorecard has helped us to think through our project plans and find out how we can adopt certain practices to achieve a higher degree of environmental and social sustainability.”

Among other things, Sagez said the Scorecard showed his project team that they would need to look more closely at the carbon emissions that would result from proposed land use changes in the project, along with nitrogen oxide emissions that can be expected from cultivation and fertilizer application.

After using the Scorecard, the Biobahia team suggested improvements to the tool that have now made their way into a new version. Going forward, the IDB plans to continue soliciting input on ways to strengthen the Scorecard. The Bank is part of the Global Bioenergy Partnership and the Roundtable on Sustainable Biofuels, both global efforts to develop sustainability criteria for biofuels, and IDB specialists will coordinate with the Food and Agriculture Organization to improve the Scorecard over the next year.

Source: Iadb

As they informed from the brazilian government the reedbeds sowed to obtain ethanol, would not be dangerous. Agency APÂ

The expansion of the reedbeds in Brazil to satisfy the growing demand of ethanol in the world won’t damage the Amazonas rainforest, said on Monday a high employee of the government. Â

In declarations at the beginning of a five days international conference on biofuels, the government’s general secretary, Dilma Rousseff, said that the country will announce a plan of agricultural areas very soon to specify where the cane can be cultivated, both for sugar or energy generating. Â

The Amazonia and other well-known regions for their wide range of animal species and of plants would be excluded. But Brazil will encourage the expansion of the ethanol production to other parts and in poor countries of the world in wich the climate is favorable for the cultivation.Â

“It is a socioeconomic reality”, Rousseff said. “It generates works and revenues, mostly in tropical countries.”Â

Rousseff also said that the expansion of the ethanol won’t compete with the production of foods in Brazil, and that space exists for other crops, including soya and corn.Â
Although the reedbeds cover 4,2 million hectares of Brazilian lands now, the minister said that that represents less than 1% of the national territory and that abundant available land exists outside of the protected areas.Â

Rousseff said that Brazil should “put an end to the myth that the cane fields are invading the Amazonia”, but the critics say that there are already cane plantations in the region and that some plan to expand. They also denounce that the conversion of grass lands and soya fields to reedbeds are displacing soya farmers and cattlemen that in turn settle down in deforested areas of the forest.Â

Rousseff said that the government of Brazil is prepared to help to the big ethanol producers that suffer because of the global credit crisis.Â

The ethanol producers were among those that could receive help when the government announced thousands of millions of dollars recently in lines of emergency credit for the companies affected by the crisis.Â

Source: La Voz

ROME (AFP)-The United Nations Food and Agricultural Organization (FAO)Â questioned the benefits of the biofuels and requested a revision of the policies and subsidies to those products, in a report published on Tuesday in Rome.Â

The document that circulates annually under the title ‘The State of Food and Agriculture´ (SOFA), analyzes the advantages and risks of the biofuels. Â

“The biofuels production based on agricultural products grew more than the triple between 2000 and 2007 and now it almost supposes two percent of the world consumption of fuels for the transport”, sustains the report.Â

“In spite of the scarce importance of the liquid biofuels in terms of the world energy supply, the demand of agricultural raw materials (sugar, corn, oleaginous seeds) to obtain them will continue increasing in the next decade and maybe later on, increasing the pressure on the alimentary prices”, warned the experts of the FAO.Â

The agency of United Nations also sustains that the biofuel impact on the environment ” is not always positive.”Â

“A bigger production and biofuels employment won’t necessarily contribute to reduce the emissions of hothouse effect gases as much as previously it had been supposed”, reveals the report.Â

“The changes in the use of the earth – for example the deforestation to satisfy the growing demand of agricultural products – are a great threat to the quality of the floor, the biodiversity and the emissions of hothouse effect gases”, Jacques Diouf pointed out, general director of the agency of United Nations.Â

The experts of FAO estimate that “the policies and subsidies of the biofuels should be reconsidered with urgency to maintain the objective of the world alimentary security, to protect the poor peasants, to promote a wide based rural development and to assure the environmental sustainability.”Â

The FAO also criticizes the fiscal incentives because they have generated “the quick artificial growth of the biofuels production”, what implies “high costs” so much economic as social and environmental.Â

The biofuels is object of a growing polemic, since its detractors assure that they contribute to the rise of the prices of the foods, the deforestation and the displacement of populations in the poor countries.Â

For its defenders, on the other hand, the biofuels can be good to cut the dependence on the petroleum and to fight against the global heating, when reducing the emissions of hothouse effect gases generated by fossil fuels.Â

The report of the FAO will generate a strong debate, mainly among the biofuel producing latin american countries, as Brazil, Colombia and the Central American El Salvador, Costa Rica and Guatemala, which took the road to the biofuels, although to a smaller scale.¼br /> United States is the first ethanol producer starting from corn (alcohol fuel), with 48% of the world total in 2007. Brazil follows its step, with 31% of the ethanol world production, manufactured starting from the sugarcane. Â

“We still don’t know the report, but for the anticipations I believe that it will raise reactions, because it doesn’t correspond to that agreed in the summit of June held in Rome”, commented to AFP Francisco Coy, representative of Colombia before the agency of United Nations.Â

The signatory countries of the declaration of Rome invited five months ago to make “studies in depth” on the biofuels, qualified as “an opportunity and a challenge.”¼br /> The answer to that order seems to be the wide report of the FAO, of some 130 pages, in which “the perspectives, the risks and the opportunities of the biofuels” are analyzed, as the subtitle recites.Â

The FAO on the other hand nurtures big hopes on the second generation biofuels.¼br /> “They are still not available at commercial level, but they use raw materials as wood, high grasses, agricultural and forest waste, and they could improve the balance of the fossil energy and the hothouse effect gases of the biofuels”, assures the entity.

“The second generation technologies, if well designed and applied, they would have a bigger potential in terms of reduction of the emissions of hothouse effect gases with a smaller pressure on the natural resources”, Diouf assured.Â

Source: AFP