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AUSTRALIA: Co-gen plants up for sale
The biomass cogeneration plants at the Broadwater and Condong sugar mills, owned by Sunshine Electricity, a subsidiary of the NSW Sugar Milling Co-operative, are up for sale, according to Australia's Northern Star newspaper.
Sunshine Electricity has received 26 expressions of interest from Australian and overseas companies about taking over the operation of the plants.
"The price will be the sticking point," Ian Causley, chairman of the co-operative's board, said.
The sale is needed to repay loans used to pay for the construction of the plants, which have proved to be a financial failure. It was hoped that the plants, which began operating in 2008 and are fuelled by sugarcane trash, would become a profitable arm of the co-operative.
However, the plants were hit by cost overruns and fuel shortages after it was discovered the cost of building a facility to process sugarcane trash before it could be used in the plant was more than four times what had been budgeted for.
Without the processing facility the plants struggled to find suitable sources of fuel.
The crash of the Renewable Energy Certificate price also contributed to shortfalls in loan repayments.
"If RECs had stayed at A$53 (US$44.7) we might have scrambled through," Causley said.
However, the certificate price dropped to A$24 and at the beginning of this year the co-operative began talks with its financers in the hope it could restructure its debts.
"It could not be done and we are now looking for a sale," Causley said.
He said the Federal Government destroyed the renewable energy industry when it flooded the market with certificates after homeowners were allowed to claim them for the installation of solar power.
Causley said it was important the cogeneration plants continued to operate as the co-op owned the boilers used to generate power at both mills.
The plants are the largest renewable base load energy projects in Australia and were backed by the government-owned Delta Electricity.
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GERMANY: Biofuels need subsidies to continue
German use of ethanol and biodiesel to power vehicles will stagnate for the next few years because of insufficient government incentives, according to Bloomberg.
Biofuels will make up about 5% to 6% of total transportation fuels in the period, little changed from 2009, said Rainer Hinrichs-Rahlwes, a board member of the BEE German Renewable Energy Federation.
"There is no stable policy framework for biofuels and this is hurting their use," he said.
Biofuel and biodiesel made up 5.4% of total transportation fuels last year in Germany. Use of fuels made from plants has fallen in Europe's largest economy after the government eliminated tax exemptions for consumers.
Tax breaks for biofuels and biodiesel are the best way to encourage expanding their use, said Hinrichs-Rahlwes.
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US: April ethanol exports at 40.8 million gallons
The Renewable Fuels Association reported April ethanol exports of 40.8 million gallons (includes both denatured and undenatured non-beverage), reports Sugaronline.
That volume compares to 48.3 million gallons in March.
Year-to-date exports are 124.3 million gallons, which means 2010 exports have already surpassed exports for the entire 2009 calendar year (113.3 million gallons). Denatured ethanol exports were virtually unchanged, but exports of undenatured non-beverage ethanol dropped by roughly 25%.
Exports to the EU, India, Jamaica, Australia, and Canada were up or stable. But exports to Brazil dropped to virtually zero, as Brazilian ethanol output rebounded from previous months.
"American ethanol producers continue to be forced to look for overseas markets for their product as domestic markets for ethanol remain saturated due to the regulatory cap on blending levels," said RFA vice president of research Geoff Cooper.
"The transition of the United States to a net ethanol exporter due to its status as the low cost producer today is a reflection of the industry's commitment to improving efficiencies and displacing petroleum. However, it also underscores the domestic opportunities lost due to the arbitrary cap on ethanol blending. As a matter of national energy security, America should first seek to maximize its use of domestic renewable fuels before it turns to overseas markets."
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DENMARK: Inbicon claims it has cellulosic breakthrough
Inbicon, a developer of biomass refineries in Kalundborg, Denmark, has turned wheat straw into cellulosic ethanol and is calling it "The New Ethanol." To mass produce this ethanol, the company also announced its plan to open its first "Inbicon Biomass Refinery," according to DailyTech.com.
Ethanol is a fuel made from feedstock mixed with fossil fuels, which supply the heat and electricity to make it a fuel. But with the use of wheat straw, like Inbicon is using, fossil fuels are no longer needed. Waste dry solids like the lignin found in wheat straw, which is part of the cell walls of plants, provides both electricity and heat. The lignin is more potent than the cellulosic fuel itself with an energy density of 6.67 kilowatt-hours per kilogram.
While the cellulosic ethanol is fossil fuel-free, the plant it will be produced in is another story. Inbicon plans to power the Kalundborg cellulosic ethanol refinery with waste steam from Denmark's largest power station in Asnaes. Also, in an effort to carbon-neutralize the facility's exhaust, lignin will be "fed" into the coal plant. Blending lignin as fuel and waste steam to make carbon neutral feedstock fuel results in the production of both electricity and fuel, which makes the plant that much more useful. In addition, this method will cut carbon emissions from the Asnaes plant.
The plant may not be a zero-emission facility, but it is a step in the right direction and does in fact reduce coal power plants' carbon footprint. According to Inbicon, the total energy efficiency of the Kalundborg refinery could increase by approximately 71% if they utilize the Asnaes' waste steam.
"We're producing not only The New Ethanol to replace gasoline, but also a clean lignin biofuel to replace coal," said Niels Henriksen, CEO of Inbicon. "But our renewable energy process is as important as our renewable energy products. The Inbicon Biomass Refinery can demonstrate dramatically improved efficiencies when integrated with a coal-fired power station, grain-ethanol plant or any CHP (combined heat and power) operation. Symbiotic energy exchange helps our customers build sustainable, carbon-neutral businesses."
Other power companies around the world are catching on to Inbicon's ideas as well. Three US power generating companies are looking to integrate Inbicon's refineries with coal plants where these plants will individually produce 20 million gallons of cellulosic ethanol.
The Kalundborg refinery is expected to make 1.4 million gallons of The New Ethanol per year, which makes it the largest cellulosic ethanol producer in the world.
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US: ADM lobbies for E12 mix, provides EPA with data support
On June 7, Archer Daniels Midland Company submitted a formal request to the US Environmental Protection Agency seeking approval of ethanol-gasoline blends containing up to and including 12% ethanol (E12) for all cars, according to a company press release.
On July 20, ADM provided the EPA additional data supporting its request for E12. ADM continues to believe that the E15 waiver requested by Growth Energy is the ideal next step to ensure Americas energy and economic security. Allowing only some cars to use E15 would discourage adoption of E15 by retailers and consumers. In fact, a decision to allow E12 for all cars would create more demand for homegrown ethanol than would a partial E15 waiver.
For these reasons, if the EPA won't allow E15 for all cars, ADM believes an E12 decision for all vehicles would provide an immediate impact on the marketplace, and would be the next best thing for reducing US dependence on foreign oil and creating jobs in rural America.
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CANADA: CA$8 billion proposed refinery in New Brunswick cancelled
Rising fuel-efficiency standards, changing consumer habits and growing use of ethanol in the United States played a big role in the cancellation of an CA$8-billion (US$7.6 billion) proposed refinery in New Brunswick, an executive of Irving Oil Ltd. said yesterday, according to Canada's Financial Post.
Closely held Irving, which owns a 300,000 barrels a day refinery in Saint John, and BP PLC, the British oil major, teamed up 18 months ago to study the feasibility of building a second 300,000 b/d refinery in Saint John to boost gasoline supplies in the US Northeast. Construction was slated to start in 2011 or 2012.
But they scrapped those plans yesterday after spending nearly CA$80-million on technical and commercial feasibility studies. Kevin Scott, director of refining growth for Irving, said gasoline demand has declined in the past two years, after growing steadily by 1% to 2% for years, and those declines appear permanent.
Rising ethanol use, "demographics, driving habits of consumers, increased fuel efficiency in vehicles and maybe fuel-efficiency gains increasing with what the auto industry has been through, all of those things add up to a long-term demand outlook... that wasn't sufficient to justify CA$4-billion to CA$5-billion of expenditure," for the first phase of the project, named Eider Rock, Scott said in an interview.
In addition, the plant would have had to compete with incremental refining capacity under construction in the United States, as well as in the Middle East and Far East that could supply North America, he said.
The move marks the third cancellation or delay of refining projects in Atlantic Canada in the past year. Harvest Energy Trust has deferred a CA$2-billion expansion of its Come-by-Chance plant in Newfoundland, and plans by Newfoundland and Labrador Refining Corp. for a new facility were stalled by the credit crunch. Elsewhere in Canada, Royal Dutch Shell canceled plans for a major refinery in southern Ontario last year, and said this month it may close or sell its 76-year-old Montreal plant.
"It became clear, particularly over the past year, that the market conditions for refining have changed since BP and Irving Oil entered this memorandum of understanding," Iain Conn, chief executive of BP's refining and marketing business, said in a statement."
The new refinery would have sourced oil from Canada's East Coast offshore projects, the North Sea, West Africa and South America.
The cancellation means the company will not need, for now, to try to repatriate thousands of tradesmen that moved to Alberta from Atlantic Canada in recent years to work in the oil sands, Scott said. Scores of energy projects were cancelled or put on hold in the oil sands last fall, but some are being re-considered with the economy recovering and oil prices rebounding.
While the recession played a role in depressing gasoline demand, Scott said the proposed refinery is one of the first in North America to be scrapped because of expectations of lower consumption over the longer term.
To complete the processes already underway, and to preserve future options in the event that market conditions return to previous levels, Irving Oil will continue with the environmental permitting processes, the company said.
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US: RFA leader says end to subsidy could wipe out industry
The president of the Renewable Fuels Association said Wednesday that ending a major subsidy could wipe out almost 40% of the US ethanol industry, according to The Des Moines Register.
"We need to have that tax credit renewed," Bob Dinneen said as he kicked off a meeting of the group's board in Des Moines.
The 45-cent-per-gallon tax credit, which goes to oil companies that mix ethanol with gasoline, expires December 31.
The US House Ways and Means Committee is considering a reduction of the tax credit to 36 cents per gallon for a green-energy bill. Growth Energy, a rival of the Renewable Fuels Association, has proposed phasing out the tax credit and directing the money to infrastructure to benefit ethanol, such as blender pumps and an ethanol pipeline.
Dinneen hopes ethanol avoids the fate of biodiesel, which has struggled for life since Congress allowed its US$1-per-gallon tax credit to lapse last December 31. Most biodiesel plants in Iowa and elsewhere have been closed or put on reduced production.
"This is a very dysfunctional Congress," Dinneen said.
The ethanol industry has been frustrated by what it considers foot-dragging by the Environmental Protection Agency over requests to raise the allowable percentage of ethanol blended in gasoline from 10% to 15%.
Their frustration has been more pointed in light of statements of support from President Barack Obama, whose successful 2008 presidential campaign got a decisive boost with a victory in the Iowa caucuses.
"There seems to be a disconnect between 1600 Pennsylvania Avenue and the EPA," said Dinneen.
The appearance of rival groups speaking for ethanol has given the appearance of a divided industry. "It's not that unusual to two have two or more groups arguing for the same industry," Dinneen said.
Growth Energy, whose public spokesman is retired Army Gen. Wesley Clark, was formed two years ago by Poet Inc. CEO Jeff Broin of Sioux Falls, S.D.
"We thought there was a need for ethanol to be more proactive," said Bruce Rastetter, a Growth Energy director and CEO of Hawkeye Energy, which has two ethanol plants in Iowa.
"The ethanol tax credit is getting harder and harder to defend," Rastetter said. "We want it to be used to build up infrastructure."
He noted that ethanol has received negative publicity in recent years over the food-vs.-fuel debate and also from environmentalists.
Dinneen said, however, that "a lot of the problem with the environmentalists is that they just don't like corn and don't want it used for fuel."
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THAILAND: Liquor tycoon invests in new Sukhothai sugar plant
Liquor tycoon Charoen Sirivadhanabhakdi has invested nearly THB10 billion (US$309.7 million) in a new sugar plant in Sukhothai. With production capacity of about 36,000 tonnes of sugar cane per day, the plant will generate THB5 billion for the province annually, according to The Nation in Thailand.
The Namtanthip (Sukhothai) plant will take about a year to construct and will start crunching raw sugarcane in the harvest season of 2011/12. It will cater to cane grown by farmers in Sukhothai and three or four neighbouring provinces.
The company will move operations of its 69-year-old sugar factory in Utradit province, which has production capacity of only 3,000 tonnes of sugar canes a day, to the new plant in Sukhothai.
Apart from liquor and beverages, the Sirivadhanabhakdi clan now owns and operates many businesses in property and hotels, retail, and agriculture.
In addition to the sugar plant, the company is setting up a biomass power plant with 36 megawatts in initial production capacity and up to 72MW of capacity in the second phase. The new power plant will use as its primary fuel bagasse created as a byproduct of the sugar plant. The power plant will supply electricity to the sugar plant as well as for sale to the Provincial Electricity Authority to distribute to local communities.
The Namtanthip (Sukhothai) sugar plant will initially process 18,000 tonnes of sugarcane per day and require about 2 million tonnes of raw cane to be crunched annually, enough to occupy a total planting area of about 200,000 rai (32,000 hectares). In the second phase, the plant will double its production capacity to 36,000 tonnes of cane per day, primarily from Sukhothai and Utradit provinces.
The sugar plant will generate between THB4 billion and THB5 billion for the Sukhothai economy and create between 8,000 and 10,000 jobs. Charoen said he decided to set up a new sugar plant in Sukhothai as the province has never had one. He said it would increase the potential of the province and increase opportunities, income and living quality for local farmers.
The plant has been approved by the Ministry of Industry and Ministry of Natural Resources and Environment regarding environmental issues. The sugar plant and biomass power plant projects will require a combined investment of about THB9 billion.
The company is also setting up sugar and biomass plants in Kamphaeng Phet province.
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SUDAN: Sugar factory to open in 2011, self-sufficiency follows
White Nile will open a US$1.1 billion sugar factory in Sudan next year, which will make the country self-sufficient on the key commodity by 2012, the company's general manager said on Sunday, according to Reuters.
White Nile sugar company will reach initial capacity of 250,000 tonnes by November 11, 2011, and be fully operational at 450,000 tonnes by 2012, Hassan Satti said in an interview with Reuters on Sunday. Kenana sugar company holds a 30% share in White Nile and other shareholders include the government of Sudan and Egyptian investors.
Satti said about two-thirds of the funding for the venture has come from loans from Middle Eastern funds or banks and the remaining third from Sudanese banks.
He also said the company was close to signing a deal with a Chinese company to build a 60 million litre ethanol plant and 100,000 tonne animal-feed plant which would be opened alongside the factory.
"At full capacity, the White Nile (sugar company) will produce 450,000 tonnes (a year) which definitely will cover the local consumption," Satti said.
Sudan's sugar consumption is around 1.2 million tonnes a year and production is about 800,000 tonnes, Satti said, adding that when the plant is at full capacity, Sudan will more than meet domestic needs and there will be a small amount of exports still heading to the European Union.
He said the project had full cash flow for 12 years post construction.
"We have soft loans from Arab organisations (the interest on) which is very, very low between 3 to 5% ... but at the same time you have commercial rates which goes into 9 to 10% but the overall weighted average is about 7%," he said of the interest on the loans.
Sudan has privatised most of its industries, beginning in the 1990s, but the government still retains control over many sectors by issuing licenses for import and export in Africa's largest country by land.
Satti said the White Nile project was part of a larger plan for Sudan's sugar industry which, if implemented, could see it service markets throughout Africa and the Middle East.
With US economic sanctions imposed since 1997, Sudan has had to look east to China, India and Thailand for help on its sugar development.
Satti said the embargo only posed a problem on some financial transactions but had not affected the project.
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S. AFRICA: Energy is key to future, growers and millers say
The sugar industry views expansion into renewable energy, such as through power co-generation and the production of ethanol, as essential for the long-term viability of its growers and millers, according to BusinessDay.co.za.
Given SA’s increasing power requirements, the National Energy Regulator of SA’s recent price determination for three years is aimed at sparking co-generation projects. Eskom will have ZAR2.3 billion (US$310.8 million) to buy private power this year, ZAR4.3 billion next year and ZAR5.8 billion in 2012.
The white paper on renewable energy sets a target for 2013 of about 4% of the projected electricity demand for that year.
Energy generation accounts for about 60% of global carbon dioxide ²emissions from human activity, and many states are trying to diminish its effect on the environment by trying to reduce emissions and limit their effect on climate.
Other big sugar producers such as Brazil and India have made big investments to produce more ethanol, which can be made from sugar cane and is deemed more environmentally friendly than petroleum fuels.
All fuel for cars in Brazil requires a minimum 20%-25% blend of ethanol, while the Indian government has given loans to sugar mills over the past three years to increase ethanol production.
A South African Sugar Association spokesman says the domestic sugar industry has done most of the research required into biofuel production from sugar but no new developments are taking place, principally because the policy environment is still being developed. SA’s biofuels industrial strategy aims for an average liquid fuels penetration of 2% by 2013, a reduction from an earlier target of 4.5% as food security concerns led to the banning of maize for biofuels. Crops under consideration include sugar cane, sorghum, sunflowers and soybeans.
Tongatt Hulett CEO Peter Staude says in the sugar, starch and property development group’s annual report, SA has limited agricultural potential to supply a significant portion of its petrol from ethanol. Many other Southern African Development Community countries have good agricultural potential but limited markets. The full community has the market and agricultural potential to emulate the proven business model of supplying ethanol to the fuel market.
Staude says every 10% of the South African fuel market supplied by ethanol would be equivalent to a new sugar industry requiring 2.2- million tons of sugar a year, creating 110,000 additional jobs and producing sufficient electricity to replace the supply from a third of a big coal-fired power station.
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INDIA: Gov't petrol company to be first to make own ethanol
At a time when the ethanol-petrol blending programme has met with only partial success, government-controlled Hindustan Petroleum Corporation Ltd (HPCL) will become the first petroleum company in the country to produce its own ethanol, according to Business-Standard.com.
Last year, HPCL had taken over two sugar mills in Bihar, at Sugauli and Lauriya in East and West Champaran districts, on a 60-year lease, extendable by another 30 years. The company had paid around INR95 crore for these.
“We will begin ethanol production from these sugar mills by year-end. While we would be using ethanol to blend with petrol at our own fuel depots, we would also be selling the surplus to other industry players,” a senior executive from HPCL told Business Standard.
The two plants will produce a little over 60 kl of ethanol daily. The production would suffice for the blending requirements of Bihar and neighbouring states.
The mills have a crushing capacity of over 3,700 tonnes per day each at these sites. Associated with each of these two mills is a 100 Mw cogeneration power plant . HPCL had invested INR614 crore to revive the defunct mills. The two units are more than 75 years old and had been closed since 1996.
Bihar had auctioned 15 such obsolete mills in 2008. HPCL had bid for three and got two. Reliance Industries bagged one. Delhi-based Rollcon Projects and S S Infrastructure of Darbhanga managed one mill each.
Halting blending
The government had, in November 2006, mandated that ethanol-blended petrol be sold through India, except in the northeastern states and Jammu and Kashmir, to reduce emission. Subsequently, it stipulated that the amount of ethanol in petrol might be optionally ramped up to 10% from October 2007 and made compulsory with effect from October 2008. Since the 5% target itself is still to be fulfilled, dates for higher levels have since been postponed.
Blending of ethanol with petrol is aimed at reducing emissions. Ethanol blends dramatically reduce hydrocarbon emissions — a major ozone layer depletor. The blending programme, that also includes biodiesel, is aimed at reducing the country's dependence on crude oil imports. India imported about 85% of its crude oil requirement during 2010/11.
Said the HPCL executive of the two units: “We have the flexibility to adjust the ethanol manufacturing capacity. We can either manufacture 50% or 70% (of capacity). Sugar production from the plant will be sold to local trading agencies. We have similar plans in other states but that will be executed post our experience from this plant.”
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US: Outlook bleak for most on ethanol tax being renewed
The sultry days of July in the nation's capital haven't been kind to Iowa's biofuels industry, according to The Des Moines Register.
The ethanol industry is fracturing and under attack inside and outside the Capitol. The industry's 45-cent-a-gallon subsidy is due to end at the end of the year, but energy bills that could provide a means of extending the tax credit have been delayed, throwing the legislation's future in doubt.
"My sense all along was that it would get extended at least for a year, but I'm not so sure anymore," said David DeGennaro, a policy analyst for the Environmental Working Group, a leading critic of the subsidy.
Biodiesel producers, meanwhile, are wondering when they will get their subsidy back. The US$1-a-gallon tax credit lapsed at the end of 2009.
A renewal of the subsidy had been attached for months in Senate legislation to extend jobless benefits, but last week the Senate passed the unemployment provision on its own, leaving the biodiesel industry once more in limbo.
Biodiesel production has slowed dramatically this year without the subsidy to help producers offset their production costs and hasn't rebounded this month even though a federal usage mandate took effect, said Michael Frohlich, a spokesman for the National Biodiesel Board.
"Obviously, it's not a pretty picture at the moment," he said.
The government's ballooning deficit - the White House on Friday predicted it would hit US$1.42 trillion next year - is making it difficult for Congress to pass anything that will increase it further, especially with the fall elections looming.
The biodiesel credit itself has not been unpopular in Washington, but it costs taxpayers much less than the subsidy for the far-bigger ethanol industry. The biodiesel measure was one of several business tax cuts or incentives that expired in 2009 and have not been renewed since. And more tax cuts are due to expire at the end of this year, including the estate tax, compounding the budget challenge for lawmakers.
"It's going to be a very difficult climate," said Tom Buis, chief executive of the ethanol trade group Growth Energy.
His group opened a division in the industry last week when it proposed to phase out the subsidy and use the money to retrofit service stations and convenience stores to sell higher blends of ethanol in their gasoline. The group hoped to include the plan in a broad energy bill that Democrats hoped to push through the Senate before the August recess.
Other ethanol groups and the National Corn Growers Association opposed the plan, preferring instead to keep the subsidy. Senate leaders announced Thursday that they were scrapping, for now, a broad energy and climate bill and instead would consider a narrow bill addressing Gulf oil issues and increasing energy efficiency.
With the election approaching, "the odds are against" any major energy bill passing, Buis said. In that case, the group favors extending the subsidy, he said.
At 45 cents a gallon, the subsidy would cost about US$6 billion next year at projected production levels.
In the House, the tax-writing Ways and Means Committee is working on a plan to continue the subsidy for a year but cut it by 20% to 36 cents a gallon. Action on it also has been put off until September.
Another challenge for the ethanol industry: A 54-cent-a-gallon tariff on imported ethanol is set to expire this fall, and the Brazilian sugarcane ethanol industry is expressing optimism Congress will cut if not eliminate it.
US industry groups say the tariff should be kept at a similar rate as the domestic subsidy to offset its benefit to Brazilian producers.
Given that the 45-cent ethanol subsidy "seems increasingly likely to be reduced and eliminated," the tariff "should go away as well," said Joel Velasco, the Brazilian industry's Washington representative.
Adding to the US industry's troubles are studies that came out in recent days - one from the nonpartisan Congressional Budget Office and the other from Iowa State University economists — suggesting that ending the ethanol subsidy would not have a major impact on its production. The Congressional Budget Office study said the industry would continue growing even without the subsidy because of rising usage mandates Congress enacted in 2007.
Republicans such as Sen. Chuck Grassley of Iowa will keep the heat on Democrats on the biofuel issue while also pressing them to address the deficit. "I can't predict whether they'll" act on the subsidies, he said.
Democrats say that extensions of tax credits should be paid for with tax increases or spending cuts. Republicans argue that no such offsets are needed so long as tax rates or incentives are being continued at current rates.
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