Brazil fines ethanol mills in Pernambuco

Brazil's Ministry of Environment has issued BRL120 million (US$75 million) worth of fines to ethanol mills in the northeastern Pernambuco state, according to Dow Jones. The 24 mills will face fines of BRL5 million each for breaches of the environmental laws such as growing sugarcane in protected areas, especially in the Mata Atlantica tropical and subtropical forest, and polluting rivers The northeastern region of Brazil has seen a large jump in ethanol consumption this year as owners of flex-fuel cars, which can use both ethanol or gasoline, opt to fill their cars using the cheaper fuel. According to the new environment minister, Carlos Minc, the inspections will strengthen Brazil's ethanol exports by stamping out criminal practices. "These practices can lead to economic barriers against the Brazilian (ethanol) product," Minc said. Inspections of ethanol mills in other states are planned, but the Ministry of Environment wouldn't give further details.

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GREECE: Tender canceled for converting beet plants to ethanol

Greece's largest sugar producer, Hellenic Sugar Industries (EBZ), cancelled a tender to convert its production facilities into bioethanol plants because of adverse market conditions, according to Reuters. EBZ has sought a strategic partner to help it convert two of its five plants to produce bioethanol to offset the loss of EU subsidies on sugar production. But cheap bioethanol imports from areas such as Brazil may hurt the sustainability of such plans. "The search for a strategic investor under our original terms, in the form of a tender, no longer serves EBZ's interest," the company said in a statement. EBZ's board will now look to negotiate directly with interested investors and examine proposals that are more in tune with "current market realities," it said. EBZ will enter direct negotiations with US-based Renew Energy and Cal West Ethanol, once it has received shareholder approval at an extraordinary general meeting this month. EBZ wants to convert its Larissa and Xanthi sugar plants in central and northern Greece into bioethanol production plants, which will be used primarily as renewable fuel for transport. The total capacity of each plant is estimated at about 120,000 metric tonnes of bioethanol a year, while the final capacity will be determined in co-operation with the new strategic investor.

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INDIA: Co-ops demanding higher prices for ethanol

Sugar co-ops are demanding oil companies pay higher prices for ethanol than the INR21.5 (US$0.49) per litre set by the government, according to India’s Economic Times newspaper. Oil companies are holding a tender for 60 million litres of ethanol in the next two weeks, all expecting to pay the set price. Ethanol producers say potable alcohol fetches INR23.5 per litre, indicating the ethanol price does not reflect the market “In the last tender for 40 million litres of ethanol, oil companies accepted the bid of a stand alone distillery in Nanded, because it quoted a rate of INR19.50/litre. The company supplied a mere 800,000 litres and sourced the rest from co-operative sugar units. Instead, you should source directly from us, the sugar mills,” Shankarrao Kolhe, a prominent SSK chief from Ahmednagar district, told oil companies.

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BRAZIL: UNICA says ethanol consumption higher in new states

UNICA says ethanol consumption is growing in states where it wasn’t previously popular, according to Dow Jones. Nine Brazilian states saw major increases in consumption of more than 100% between January and May compared to a year ago, said UNICA in a press release. UNICA said ethanol consumption is rising in states where ethanol was less popular than gasoline. Mato Grosso state lead the pack, recording a 220% rise to 17.9 million litres of ethanol consumed between January and May versus 5.6 million litres in the same period in 2007. Elsewhere, ethanol consumption in Maranhao rose 193%, Espirito Santo 158%, Amazonas 144%, Rio de Janeiro 143%, Bahia 142%, Rondonia 134%, Para 130% and Tocantins 124%. Overall, Brazil's total ethanol consumption rose 54.8% to 5 billion litres between January and May. "In recent weeks, in 92% of the Brazilian market, ethanol from the pump recorded prices 65% lower than a liter of gasoline," said Antonio de Padua Rodrigues, UNICA technical director. Brazil's northeastern region saw a big jump in consumption, with many owners of flex-fuel cars switching to ethanol, said Renato Cunha, who heads Pernambuco's sugarcane industry association. "The higher consumption of ethanol is due to the increase in use of ethanol in flex-fuel cars," said Cunha on Monday.

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Thailand to revamp sugar rules to boost ethanol production

The Thai government is likely to review its Cane and Sugar Act for the first time since 1984 to allow for greater flexibility in the market to adapt to the needs of the biofuel industry, according to Dow Jones. A meeting was held among sugar industry association members and other industry participants yesterday to discuss six areas: the Sugar Act; waste water management; soil and fertilizers; mechanical equipment; geographical information systems and logistics; and ethanol. Some of the proposed amendments to the act, which the Office of the Cane and Sugar Board will present to the government soon, include streamlining the number of subcommittees in the board and reducing the number of ministries involved to allow for greater efficiency. "One proposal will be to allow the production of ethanol from sugar cane juice," said an industry executive who attended the meeting but declined to be named. Thailand's sugar law currently allows the production of ethanol using molasses, and its domestic supply is now sufficient, but there is concern that with the rising demand for ethanol, ethanol producers should be given more options in terms of production, he said. Thailand earlier announced that it will be introducing the use of gasohol E85, a blend of 85% ethanol and 15% premium petrol, by October. "The whole process will take up to a year, as the proposals will have to be approved by the Cabinet and parliament," said a senior executive in the sugar milling industry.

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BRAZIL: Petrobras and Mitsui team up on Goias ethanol project

Brazilian state-run energy giant Petrobras and Japan's Mitsui & Co. announced Wednesday that the companies will invest in an ethanol project in Goias state, according to Dow Jones. According to a statement, the two companies will partner with Itaruma Participacoes SA to produce 200,000 cubic metres of ethanol from sugarcane annually. Petrobras didn't disclose the amount it was investing in the project. In March, Petrobras and Mitsui created a joint venture for investments in renewable energy called Participacoes Nippo Brasileira em Complexos Bioenergeticos SA. The joint venture aims to take stakes in ethanol mills, with the goal of reaching the capacity to produce 4.5 billion litres of ethanol.

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US: Importing Brazilian ethanol would drop gasoline 5 cents per gallon

If more Brazilian ethanol were allowed into the US, it could contribute to a 5 cent per gallon reduction in gasoline costs on average, according to Dow Jones. "We calculate that, based on gasoline prices today, gas could be 5 cents per gallon less if more Brazilian ethanol was being blended," said Jacyr Costa Filho, Guarani's CEO. "It could be even less in states like Florida, because of its proximity to Brazil," he said.

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US: Food groups call on Bush to drop ethanol tariff

A coalition of livestock producers and food companies is calling on President Bush to lift the 54-cent-per-gallon tariff on imported fuel ethanol, according to the Des Moines Register newspaper. The groups say that increasing imports of ethanol would hold down the price of grain for animal feed and food ingredients The groups include the National Pork Producers Council, the American Bakers Association, dairy giant Dean Foods Co., meatpackers Tyson Foods Inc. and Smithfield Foods Inc., and soft-drink makers Coca-Cola Co. and PepsiCo Inc. Removing the tariff on ethanol imports “will alleviate a protion of the unnecessary feed and food price inflationary pressure that are adversely affecting our economic well-being and American consumers,” the groups wrote. Matt Hartwig, a spokesman for the Renewable Fuels Association, said that ending the tariff would “do nothing to bring down the price of corn, food or gasoline.” He said the proposal was part of an “anti-ethanol smear campaign.”

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BRAZIL: Higher sugar prices see mills selling

The rise in raw sugar futures this week has translated into an active futures business from Brazilian sugarcane milling companies and traders, according to Dow Jones. Sugar futures on the ICE Futures US exchange closed up 26 points to 13.98 cents for the October contract and are over 15 cents for March 2009. "The futures market has become cash for sugar companies down here," said a broker at a major sugarcane operation in Sao Paulo. The week has been relatively vacant of any news items. Sugar returns per tonne, or ATR, remain low, meaning yields of sugar being produced per tonne of sugarcane crushed is lower than it was last year. That's not a surprise, though, because the Union of Sugarcane Industries, UNICA, has been warning about that for months. As a result, most mills here are happy churning out more ethanol than sugar anyway to feed both local and global demand. "Ethanol interest is picking up and we see some pressure coming down for Washington to reduce the US$0.54 per gallon tariff on Brazilian ethanol," said Alex Oliveira, a broker at Newedge in New York. Were that to happen, ethanol prices at the pump in Brazil would quickly rise, as the local market would have to compete with US buyers who currently account for less than 10% of Brazil's ethanol consumption. Higher ethanol prices would bode well for sugarcane milling companies who have been hurt these past 18 months from low sugar prices on the ICE. Ethanol is still paying more than sugar, but that surely has not stopped sugar business. The sugar trade is on the upswing as Brazil is in the middle of its harvest season.

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POLAND: Drought could cut sugarbeet crop by 13%

Poland’s Institute of Soil Science and Plant Cultivation says drought could cut this year’s sugarbeet crop by 19%, according to Dow Jones.

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JAMAICA: Government to retain 25% of sugar mills

Jamaica’s government will retain a 25% share of the five sugar mills it sold to Brazil’s Infinity Bioenergy, according to Reuters. The new venture will be called Newco Ltd and it will lease sugar fields for a minimum of 50 years, said Agriculture Minister Christopher Tufton. In addition to the production of sugar for export, Newco will take control of an ethanol dehydration plant now operated by the state-owned Petroleum Corp of Jamaica and a power plant to produce its own electricity. Excess electricity produced will be sold to the national grid. Ethanol will be produced under the deal, the minister said. The Brazilian company will take control of the factories in October. Tufton did not disclose the sale price. Many of the workers could expect to be hired back by Newco, Tufton said.

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BRAZIL: Petrobras in ethanol deal with Conoco

Petrobras and Conoco signed a cooperation agreement regarding sugarcane-based ethanol and petroleum, according to Reuters. Petrobras said in a statement the agreement envisages studies to strengthen both companies' positions in cane ethanol production and exports and in oil exploration, production, refining and trade. "The agreement seeks to identify cooperation opportunities in the areas of ethanol, (oil) exploration and production, refining and trade of petroleum derivatives," Petrobras said. The companies will evaluate possible partnerships for oil exploration and production in Brazil and abroad.

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BRAZIL: Copersucar to export ethanol to Japan

Brazilian ethanol producer Copersucar, eyeing increased export potential and growing competition, has signed an agreement to supply 200 million litres per year of ethanol exports to Japan Biofuels Supply LLP (JBSL), according to the Oil & Gas Journal. Copersucar's ethanol will be turned into ethyl tertiary butyl ether and will serve as a fuel additive in Japan, which allows fuel retailers to mix a 3% ethanol blend in nationally sold gasoline. JBSL, which began marketing biogasoline in April 2007, is comprised of Idemitsu Kosan Co., Tonen General Sekiyu KK, Taiyo Oil Co., Fuji Oil Co., Cosmo Oil Co., Kyokuto Petroleum Industries Ltd., Kyushu Oil Co., Showa Shell Sekiyu KK, Nippon Oil Corp., and Japan Energy Corp. JBSL plans to import 360,000 kilolitres of ethanol from fiscal 2010. If Japan expands its blending of ethanol or ethyl tertiary butyl ether in its national gasoline as is expected in the coming years, Brazilian ethanol exports, which reached nearly 3.1 billion litres from the 2007/08 season, could nearly double. Copersucar, which controls 33 cane mills, expects to produce 3.9 million tonnes of sugar—up 10% from last season—and 3.7 billion litres of ethanol, up 14% on the year.

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EU sticking to 2020 biofuels target

The European Union will ignore critics who accuse it of helping to boost food prices by embracing an ambitious and binding target for the use of biofuels, according to the Associated Press. The European Commission is sticking to its proposal that biofuels account for at least 10% of energy used by the EU's huge transportation sector by 2020, because voluntary targets have failed miserably so far, EU spokesman Michael Mann said. "If you don't have targets, you don't make progress" in combating climate change, Mann said. In recent weeks, European Parliament members, the international relief group Oxfam, environmental organization Greenpeace and other advocacy groups have all questioned the merit of biofuel targets. But Mann shrugged off claims that biofuel production triggers higher food costs and said the EU will go ahead with plans to expand the sector. Mann said there is "good evidence" biofuel production does not boost European food prices "to a significant extent," because no food crops are used for fuel in the EU. "We think that our best contribution can be to make a system that is actually sustainable, that makes us lead by example."

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FIJI: FSC says EU trade deal not at risk

The Fiji Sugar Corporation says the 300,000 metric tonne of export deal with Tate & Lyle isn’t at risk, according to the Fiji Daily Post. FSC Acting Chief Executive Officer Deo Saran said the supply contract with the buyers was “not under threat” at all. “The mills are continuing to face cane supply shortages resulting in mill stoppages despite the fact the crushing is now into the third week,” he said. Saran explained that while it takes mills at least two weeks to adjust, this year the stoppage was largely attributed to the low cane supply, which had a detrimental effect on the mechanical performance of the mill. He said it was imperative to have high and consistent supply of cane to optimise milling efficiencies.

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CHINA: Fiji to explore ethanol and electricity technology transfer

A delegation from Fiji is in China exploring the country’s various industries that could complement Fijian sugar, according to the Fiji Daily Post. Fiji is looking at technology transfer of China’s ethanol production process for cassava, electricity generation from household waste and high quality paper production from sugarcane bagasse.

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OPEC head blames dollar and biofuel for oil prices

OPEC’s president says the price of petroleum will continue to rise because of ethanol, the weak dollar and political tensions, according to Market Watch. "The price of oil will rise again in the coming weeks," Chakib Khelil -- the Algerian energy minister and currently president of the Organization of Petroleum Exporting Countries -- said in an interview with an Algerian newspaper. "We have to follow the evolution of the dollar, because a 1% fall in the dollar means US$4 more on the price of oil." Khelil said the weak dollar and geopolitical worries are responsible for 60% of the rise in crude prices, but also said that "the intrusion of bioethanol on the market" was alone responsible for the other 40%. He didn't explain why more ethanol would drive crude prices higher, but said the dollar's decline was because the Federal Reserve had kept interest rates low. Khelil repeated his view that a lack of supply is not the problem. "As producer countries, we think that the current supply is sufficient, that this balance in supply is in everybody's interests and that it shouldn't be disturbed, because the current rise in oil prices is in nobody's interest," he said, according to media accounts. Khelil said petroleum production had been limited by Western investment embargoes on Libya and Iran, and by the war in Iraq.

 

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EU ministers misread biofuels obligation

European Union energy ministers said at an informal meeting Saturday they had been laboring for 18 months under the false impression that an EU plan to fight global warming included an obligation to develop controversial biofuels, according to Agence France Presse. What seems to be a stunning misreading on the part of policymakers in Brussels comes at a time when the image of biofuels has shifted over a matter of a months from climate savior to climate pariah. Documents issued by the EU describing its ambitious energy and climate plan, unveiled in January 2007, have consistently said that 10% of all the fuel powering vehicles would come from plants by 2020. A closer reading of the texts by the ministers apparently revealed otherwise. "The member states realized that the Commission's plan specifies that 10% of transport needs must come from renewable energy, not 10% from biofuels," Jean-Louis Borloo, the French environment and energy minister, said at the close of the three-day gathering.

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EU may need to import two-thirds of its biofuels

The European Union may get barely one-third of its target for biofuels in transport fuels from home-produced sources by 2020, requiring massive imports to meet the goal, according to Reuters A draft European Environment Agency, sent to the bloc's 27-member states for comments and seen by Reuters, shows the most cost-effective and sustainable scenario for biofuels would deliver just 3.4% of the EU's transport fuels from domestic production in 2020. An EEA spokeswoman said the report was at an early stage and was not scheduled for publication until September. She declined to discuss details but said the final figure may be higher as the model does not factor in the effect of soaring oil prices, international trade or the fact that biomass may be diverted from power or heat generation to boost its use in transport fuels. A key European Union lawmaker said on Friday he had broad parliamentary backing to propose changing the EU's target for biofuels so that 4% of road transport fuels come from renewable sources by 2015. Claude Turmes told Reuters one-fifth of those renewable fuels would have to be either second-generation biofuels or electric vehicles. There would be a major review in 2015 to decide whether to move towards an 8%-10% target in 2020. "Firstly this would slow down the rush into non-sustainable biofuels, and then it would create a real incentive for second generation biofuels," he said on the sidelines of a meeting of EU energy ministers. A joint letter by biofuel producing nations to EU lawmakers this week supported the 10% goal, saying it was the best way to spur sustainable production. The EU should be cautious about introducing legislation on issues which are not properly understood, said the letter signed by the Ambassadors of Argentina, Brazil, Indonesia, Malawi, Malaysia, Mozambique and South Africa. "Questions for which there is still a significant level of uncertainty, such as indirect land use change, should be addressed at a future stage, as soon as there is enough scientific evidence to do so," said the letter seen by Reuters. "Provisions concerning the protection of biodiversity should be precise and should not disproportionately penalise countries rich in biodiversity with unjustified, wide-ranging restrictions on sustainable use of their territory," it added.

 

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SWEDEN: SEKAB signs ethanol deal with Brazilian Louis Dreyfus

The Brazilian unit of Louis Dreyfus Commodities has agreed with Swedish ethanol trading company SEKAB to supply ethanol, according to Dow Jones. Louis Dreyfus Commodities' ethanol unit, LDC Bioenergia, will begin to supply certified sustainable hydrous and anhydrous ethanol in August until April 2009, as Louis Dreyfus spokeswoman said. The companies didn't disclose the amount of ethanol to be exported to Sweden and northern Europe. However, "the volumes will vary depending on the Brazilian sugarcane crop and the price of ethanol," the press officer said. SEKAB started a fledgling flex-fuel market in Sweden in 1994. Sweden's ethanol fuel market is expected to be around 400 million litres in 2008, SEKAB said recently. Ethanol is expected to surpass gasoline use within the next eight years in Sweden, according to SEKAB’s calculations. Roughly 25% of Sweden's automotive fleet consists of flex-fuel cars, which can operate on either gasoline or ethanol. SEKAB expects flex-fuel cars to rise to 50% by year's end.

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BRAZIL: Millers miss out on commodities boom

Record ethanol consumption in Brazil, surging exports of the biofuel to the United States and a recovery in sugar and ethanol prices will not be enough to pull local mills' margins out of the red, according to Reuters. Sugar and ethanol prices have started to improve since December as investment fund buying stormed into commodity complex after a gloomy period of low profitability mainly due to a huge global surplus of sugar. But this will be offset by a strong surge in costs and the local currency against the dollar, and new investments in production in the world's top sugar and second largest ethanol producer, are unlikely under current market conditions. "People talk about a commodities boom. But high commodities prices in dollars do not mean a boom," said Carlos Murilo Barros de Mello, commercial director at Cosan, Brazil's largest sugar and ethanol producer group. "It will be a boom when producers' profit margins rise, and this is not the reality now. Maybe it is to energy and metals, but not for sugar and ethanol," de Mello said. Costs to produce anhydrous ethanol, which in Brazil is made from sugar cane, rose 20% in reais from February 2007 through April 2008, according to Datagro analysts, who forecasts a new increase until July. "Practically all the commodities rose and it was possible to compensate all the increase in costs. In ethanol and sugar, prices would need to rise much more to reach this level," said Antonio de Padua Rodrigues, technical director at the Sugar Cane Industry Association (UNICA). "The real problem is not the price, but costs and the currency exchange," said Luiz Guilherme Zancaner, president of Unialco sugar and ethanol group. He said fertilizer prices rose 64% from a year ago. Cane industrial yields -- the amount of sucrose per tonne of cane -- are lower than the same time last year, when the dry weather contributed to sugar concentration in cane. Poor sugar content means a rise in transport and production costs as mills get less product from each tonne of cane they harvest, transport and crush. "I would say profit this season will likely be lower than in the previous one, which was already difficult. (Sugar and ethanol) prices will possibly be higher (than in 2007/08) but costs will be even higher still," Padua said. "Projects that are being built were decided in 2006, 2007. You don't see any new investment, to be ready around 2011, 2012," Padua said. "Prices have to reach 17 cents (per lb) for Brazil to resume planting cane. At 15 cents, no mill will be built," Cosan's de Mello said.

 

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UK: Report calls for slowdown on biofuels

In his long-awaited review of the sector, Ed Gallagher concluded that biofuels should not be abandoned but that the rate of ad