15/04/2011 (City Journal) - We're less than 50 years from the end of world oil supplies at current consumption rates according to a new report by HSBC bank. That coming shortage has brought new calls for increased reliance on biofuels, including from President Obama in last month's energy speech. Biofuels are made from crops like corn, sugar, palm oil and cassava root which are harvested and then shipped to plants to be converted into fuels like ethanol.
While it's likely that biofuels will play a significant role in powering more efficient vehicles in the US and China, the poor nations that rely on these crops for food are facing rising rates of hunger and poverty as a result. Research by the World Bank found that an increase in biofuels production over 2004 levels would push more than 35mn additional people into absolute poverty, or an income of less than $1.25 per day. An analysis in the spring 2011 issue of The Journal of the Association of American Physicians and Surgeons, meanwhile, used statistics from the World Health Organisation (WHO) to estimate that our growing need for biofuels will result in at least 192,000 excess deaths from hunger and poverty every year. This is higher than the 141,000 deaths the WHO estimates to be caused by global warming each year.
The United Nations Food and Agriculture Organisation reports that 2011 has the highest food prices yet recorded. Despite the price of corn rising 73% in the US late last year, in part due to 40% of the crop now being used to make biofuel, Americans will probably only see a 2-3% increase in food prices in 2011. "For Americans it may mean a few extra cents for a box of cereal," said Marie Brill, senior policy analyst at ActionAid, an international development group. "But that kind of increase puts corn out of the range for impoverished people."
Though this year's skyrocketing food prices can also be attributed to high oil prices and severe weather events destroying crops in Russia and Australia, the market for biofuels also bears some responsibility. "What is certain is that biofuels are playing a role," said Oliver Dubois, a bioenergy expert at the Food and Agriculture Organisation in Rome.
This is especially true since many industrialised countries are aiming a transition from reliance on fossil fuels to greater use of biofuels.
Biofuels
31/01/2011 (Eco-Business.com), Singapore - Defunct first-generation (1-G) biodiesel plants - which became uneconomical when palm oil prices soared - are being revived as new owners upgrade them to make other products like chemicals used for oil and gas drilling.
The ‘rejuvenation’ of Northfield-based Stepan Company is the first of these. After acquiring Peter Cremer’s 100,000 tonnes per annum (tpa) methyl ester plant in July last year, the American chemicals company is currently upgrading it and installing another fractionation column at the Singapore plant to potentially double its capacity to 200,000 tpa.
The plant’s upgrading and expansion, scheduled for completion in February next year, will enable Stepan to produce surfactants used in oilfields. Stepan’s surfactants are used in three major oilfield market segments, including drilling, production and stimulation. Methyl esters are for instance used as solvents in drilling fluids.
Another Jurong Island 1-G biodiesel plant which looks set to go the same route is the $130 million Jurong Island plant (once touted as the world’s largest biodiesel facility) of Australian-owned Natural Fuel Pte Ltd. The plant which folded up in late-2009 is understood to have changed hands recently. But no details are available at this time.
President and CEO of Stepan, F Quinn Stepan Jr said at the time of its acquisition of Peter Cremer that: ‘Methyl esters are a core building block of Stepan’s surfactant business and the acquisition of this asset on Singapore’s Jurong Island provides a great opportunity to reach our global customer base with methyl esters (ME) and value added derivatives.’
‘Our plan is to install methyl ester fractionation capability on the site in order to supply our customers and our internal surfactant needs globally with fractionated methyl esters and derivatives made from tropical oils available in the region.’
The financial terms of the acquisition of the US$20 million plant - previously a joint venture involving Germany’s Peter Kremer and Malaysia’s Kulim Berhad - were not disclosed.
Stepan just over a week ago awarded a $14.6 million contract to Rotary Engineering to build a new four-storey 50,000 tpa (expandable to 100,000 tpa) fractionated ME plant and also upgrade the existing plant. The plant is expected to tap raw materials like palm oil and coconut from this region.
The early 1-G plants here like Natural Fuel and Peter Cremer, and a third plant belonging to Continental BioEnergy, essentially fell victim to soaring palm oil prices. Palm oil prices had tripled to US$1,400- plus a tonne by March 2008 from US$450 a tonne around 2005/06 when the Jurong Island plants first started.
Given also stiff competition from the many rival biodiesel plants in neighbouring palm oil producing countries, Malaysia and Indonesia, Singapore has been promoting more advanced 2-G plants, or second generation plants, with biofuels developed from non-edible or discarded plant parts.
Finland’s Neste Oil which expects to ramp up its just-started $1.2 billion biodiesel plant at Tuas to full production by mid-year, exemplifies such 2-G technology.
Its 800,000 tpa Singapore plant - the largest in the world, with an identical new twin plant in Rotterdam starting up also around mid-year - produces biodiesel from 100 per cent renewable materials like palm oil and animal fat. Its advanced 2-G refineries allow Neste Oil to produce biodiesel from straight processing of the raw materials.
The Economic Development Board, in a background note to a recent tender for a consultant, said: ‘EDB believes bio-based feedstocks could add a new dimension of chemical feedstock option on Jurong Island. The fast-growing bio-based chemicals industry would also create new economic opportunities for Singapore.’
SIngapore Biodiesel Plants
14/12/2010 (Star Advertiser) - Hawaiian Electric Co. has announced plans to build a facility to convert palm oil into biodiesel. The biodiesel will contribute badly needed and affordable fuel for the utility to provide electricity to Hawaii's people. The biodiesel will help offset Hawaii's dependence on other imported energy sources. Hawaii's Public Utilities Commission has approved the plan, including specific sustainability commitments.
And yet, radical environmental groups have spearheaded a campaign to prevent the development. They worry about the impact of palm oil production on rainforests in the developing world. The critics are wrong; the project will benefit Hawaii residents and men and women in developing countries, as well as the global environment.
Palm oil comes from regions of the world now facing extreme poverty. The people need to raise their living standards. In these regions, much of the population lives on just a few dollars a day. These nations desperately need to develop industries that can trade in global markets and provide living wages to their people.
The economic development process is historically jump-started by agriculture projects. Palm oil production can lift the world's most destitute out of abject poverty. Residents will have the resources to pursue productive activities and rewarding life-style enhancements. This includes things many of us in the U.S. take for granted, such as clean homes and access to education. Consumers of palm oil play a key role in helping this process unfold.
But what of allegations that palm oil harms the environment? The palm oil will come to Hawaii primarily from Malaysia, already a global leader in environmental health. Malaysia has committed to conserving 50 percent of its forests, far exceeding the 10 percent average that must be met according to United Nations agreements.
Contrary to claims from the German environmental group leading the campaign against the HECO plan, palm oil is the most sustainable biofuel on the planet. More fuel can be produced on a smaller footprint from the oil palm than alternative biofuels such as corn-based ethanol or German rapeseed oil.
Palm oil is a perennial crop that can be converted to biodiesel, while other vegetable crops like soya that can create biodiesel are annual. Palm oil requires less tillage, resulting in much fewer greenhouse gases released into the atmosphere. It also requires considerably fewer energy inputs to grow and maintain.
In a recent statement, HECO correctly stated "biofuels are a part of Hawaii's clean energy future. Biofuels allow us to switch from 'black' to 'green' fuel in our existing generators, reducing dependence on and vulnerability to imported oil."
Of all possible biofuels, palm oil is king for its affordability, efficiency and eco-friendliness. Denying the HECO agreement would hamper wider adoption of sustainable practices worldwide.
The critics of palm oil want Hawaii to adopt domestic sources, such as jatropha. But jatropha is a limited-use commodity. Economies of scale that can drive down costs are impossible to achieve.
Further, Hawaii simply does not have adequate renewable resources in the form of wind, solar and geothermal to power its economy in a cost-effective manner. HECO provides electricity to 95 percent of residents and needs reliable and inexpensive energy sources such as palm oil to satisfy customer needs.
Hawaii's economy is built on trade and openness to the wider world. It has a golden opportunity to help some of the world's poorest citizens rise up from inhuman poverty while reducing its own dependence on fossil energy and sending a clear signal that sustainability is good economics and citizenship. What is wrong with that?
Environmental Health
Neste Oil has begun trials of their Neste Green 100 diesel replacement made from palm oil. The field trials will include vehicles of Neste employees as well as private citizens in the Helsinki, Finland area.
Neste Green 100 is not biodiesel, as it is a diesel replacement (hydrocarbon) rather than a fatty methyl ester. Lab tests have shown a 40-80% lifecycle reduction in GHG emissions versus petroleum diesel with lower tailpipe emissions and particulates as well.
The Neste fuel contains NExBTL, made from palm seed oil, and is 100% renewable. This trial batch is specifically designed for the Finnish climate and conditions.
NExBTL is made thorugh the high-pressure hydrogenation of fatty acids and creates byproducts including propane and gasoline. Neste has two 800,000 tonne capacity plants under construction, one in Singapore and the other in Rotterdam. They will go online this year and next respectively.
Source: Future Car
Recommended reading..
KUALA LUMPUR, March 12 (Reuters) - Neste Oil could buy 2.4 million to 2.5 million tonnes of vegetable oils for four biofuel plants, putting the Finnish refiner on par with consumer goods giant Unilever as a top vegetable oil buyer.
The bulk of Neste Oil's vegetable oil purchases will come from palm oil, currently the cheapest in the world.
Here are some facts about Neste Oil and its growing palm oil use.
- Neste Oil has developed biofuel technology that allows flexible use of any vegetable oil or animal fat for producing its NExBTL fuel. The fuel does not need to be blended with fossil diesel and can be used as it is for the transport sector.
- Palm oil will make up the bulk of the refiner's feedstock. Analysts say this may narrow palm oil's discount to soyoil below $100 a tonne.
- In Finland, Neste Oil has two plants producing NExBTL, which has been marketed as the world's cleanest fuel. The combined capacity of the factories stand at 350,000 tonnes.
- Neste Oil has invested a combined 1.22 billion euros to build one biofuel plant in Singapore and another in Rotterdam that each have a capacity of 800,000 tonnes. The Singapore plant will be completed in 2010 and the Rotterdam factory in 2011.
- The firm is part of the Roundtable on Sustainable Palm Oil (RSPO) -- a grouping of planters and consumers who have developed a certification system that includes commitments to preserve wildlife and forests when expanding estates.
- Neste Oil, which has committed to use only certified palm oil by end-2015, will still make its own greenhouse gas assessments on crude palm oil sourced through the RSPO.
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The Finnish refiner now applies the segregation method to its supply chain system that allows for the mixing of certified green palm oil with those produced by non-RSPO plantations.
- It may go over to mass-balancing its supply chain, which means Neste Oil will administer the mixing of these two type of palm oil available so that they know the conditions and the farming methods of their suppliers.
- Neste Oil dropped to an underlying operating loss in the fourth quarter due to weak margins and said it expected 2010 to be challenging.
13/01/2010 (The Jakarta Post) - Palm oil is one of the world's most traded and versatile agricultural commodities. It can be used as edible vegetable oil, industrial lubricant, raw material in cosmetic and skincare products and feedstock for biofuel production.
Growing global demand for palm oil and the ensuing cropland expansion has been blamed for a wide range of environmental ills, including tropical deforestation, peatland degradation, biodiversity loss and CO2 emissions.
In response to these concerns, a group of stakeholders - including activists, investors, producers and retailers - formed the Roundtable on Sustainable Palm Oil (RSPO; www.rspo.org) to develop a certification scheme for palm oil produced through environmentally- and socially-responsible ways.
It is widely anticipated that the creation of a premium market for RSPO-certified sustainable palm oil (CSPO) would encourage palm oil producers to improve their management practices.
However, the RSPO faces several challenges, including the high cost of undergoing certification that currently is entirely borne by producers, and a lackluster demand for CSPO.
Following the first shipment of CSPO to Europe in November 2008, less than 3 percent of the total volume of CSPO produced (*1.05 million tons) had been sold.
Even after a year, in October 2009, only *200,000 tons of CSPO (*19 percent) had been purchased by manufacturers of palm oil products.
The reason for the slow demand for CSPO is unclear, but is likely due to the global financial downturn causing buyers and manufacturers to be less willing to switch to premium palm oil.
The economic crisis may have also affected efforts to promote sustainable consumerism in countries, such as China and India, which are the world's largest importers of palm oil. A further factor could be a lack of consumer confidence in RSPO's credibility; stoked by activists' accusations that certification is the industry's attempt at greenwashing to mislead consumers.
On the other hand, other environmental groups warn that if the RSPO should fail in its endeavor, the palm oil industry will likely revert to business-as-usual practices that will continue to harm the environment.
Here, we argue that the financial burden and risk of producing sustainable palm oil should not fall solely on producers; instead these costs should be shared among key actors along the palm oil supply chain that includes both traders and buyers.
We further argue that at the national level some countries may be more financially capable than others in creating a stronger demand for premium palm oil.
As a thought exercise, we developed an "ability-to-pay" index that identifies the richest and largest palm oil importing countries as those that are most morally obligated to contribute to developing a successful CSPO market to raise the environmental performance of the palm oil industry.
In its simplest formulation, this ability-to-pay index could be a multiplier function of two metrics - a country's per capita import volume of palm oil and its per capita Gross Domestic Product (GDP).
Import is a more appropriate metric to consider than consumption because countries that benefit from importing and re-exporting palm oil (i.e., traders) are also obligated to reduce the environmental impacts of their profiteering activities.
Based on 2007 values of these two metrics), we calculated the ability-to-pay index for 156 countries (see table). The top 10 countries on this list are: the Netherlands, Germany, United States, United Kingdom, Japan, Italy, Belgium, China, France and Spain.
The Netherlands justifiably tops the list, being both the second largest importer (1.24 million tons) and the largest exporter (1.25 million tons) of palm oil; and ranks among the richest industrialized nations in the world (per capita GDP: US$46,750). Indeed, six of the "Group of Eight" or G8 nations are represented in this list (i.e., Germany, United States, United Kingdom, Japan, Italy and France).
In contrast, although China is the world's largest importer of palm oil (5.4 million tons), by virtue of it being significantly less affluent (per capita GDP: $2,575) than other major palm oil importers, it is ranked eighth on our list. China also happens to be the only developing country in this group.
What are the financial implications of switching from uncertified to certified palm oil for the country and individual consumer? We based our estimates of the cost of large-scale adoption of CSPO on a palm oil price of $781/ton (2006-2008 average) and an estimated 15 percent price differential between uncertified and certified palm oil.
We found that Indonesia - the world's largest palm oil producer - which consumes 4.9 million tons of palm oil annually (2008 values), would incur an additional cost of $571 million by switching from consuming uncertified to certified palm oil; whereas for the United States, which consumes 960,000 tons of palm oil annually (and is experiencing rising palm oil demand), the added cost would be $112 million.
For the individual consumer in Indonesia, he or she would need to spend an additional $2.50, which represents 0.13 percent of his or her annual income (per capita GDP); whereas an American consumer would only need to spend an extra $0.40, equivalent to 0.0008 percent of his or her yearly income.
Thus, an individual in a developing country such as Indonesia not only has to shoulder the cost of producing sustainable palm oil, but he or she would also be much heavily burdened by switching to using sustainable palm oil, compared to a consumer in a richer nation such as the United States.
Given the anticipated growth in global demand for edible vegetable oils and biofuels, a certification scheme could prove to be an attractive financial incentive - a key "pressure point" of the industry - for farmers to improve their environmental performance.
However, for any certification scheme to be credible and feasible, its financial burden would have to be appropriately shared among different stakeholders. In particular, as suggested by our analysis, the richer buyers and traders of palm oil have a moral obligation to ensure the success of certification.
NGO: Palm oil industry highly sustainable in developing economies 01/10/2009 (The Star Online), Petaling Jaya - Palm oil, which accounts for 60% of the global vegetable oil trade, has come under fire from Greenpeace and Friends of the Earth. The non-governmental organisations (NGOs) are pressuring processors and consumers to boycott the oil and European Union (EU) governments to block its import based on the contention that palm oil damages the environment.
But, according to a report by World Growth entitled Palm Oil – The Sustainable Oil, palm oil uses less land than crop-based oilseeds.
“Only 0.26ha is required to produce a tonne of palm oil while soybean, sunflower and rapeseed need 2.2ha, 2ha and 1.5ha respectively to produce the same amount of oil,” said the report.
The proposed restriction may also hurt the export trade of developing countries such as Malaysia and Indonesia that collectively produce 87% of the world’s palm oil.
The report said the palm oil industry was a highly sustainable development tool in the economies of many developing countries.
World Growth chairman Alan Oxley said the campaign by environmental groups to prevent conversion of forest land to other more productive purposes would deny developing countries the opportunity to use palm oil as a development tool.
“The World Bank and the Asian Development Bank have rated palm oil in Indonesia and Malaysia respectively as a very high quality development tool for reducing poverty,” he told StarBiz via email.
In Malaysia, the world’s second largest palm oil producer, the industry currently employed 570,000 people with export earnings of more than RM68bil last year, said the report.
World Growth said the EU import demand for palm oil had also grown as some countries there had resorted to using it as a feedstock for bio-diesel production.
“But the proposed EU Renewable Energy Directive includes a condition that will restrict the availability of palm oil,” it said.
On the industry’s impact on the environment, the report said it had not destroyed forests’ biodiversity in developing countries.
“For example, palm oil is restricted to only 20% of the total land in Malaysia allocated for agricultural purposes.
“And in Indonesia, palm oil is only cultivated in areas set aside for commercial production,” it said.
Oxley added that biodiversity in forests was protected by establishing forest conservation areas which contained representative strands of natural forests, not by imposing a blanket ban on conversion of forest land for other purposes.
“And well-managed oil palm plantations are more effective in absorbing greenhouse gases than natural forests,” he said.
Moreover, said the report, the technical understanding of carbon footprint of oil palm, other plantations and forest industries was still weak.
World Growth is a non-profit NGO established to bring balance to the debate over trade, globalisation and sustainable development.
