ecostory 107-2007
Fuel crops cultivate hopes and fears

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Quotes only - from the below >article< - minimal comment.
  • "[...] warn this month of "a climate bomb" in Indonesia, where forests and swamps are being stripped to make way for palm plantations"
Environmental developments:
  • Increasing depletion of agricultural surfaces and soil quality, biodiversity = loss of living areas for oran utans, for example, threats by changing weather patterns.

    Reference data for comparison:
  • fossil energy developments
  • Food outlook (FAO)
  • BBC NEWS Wheat prices reach record level 24 August 2007

    A comment from an internet disussion group:
    Gasoline and milk have been running neck and neck about $3 per gallon for years now.
    So there's a certain symmetry to a world which dies in a mad competition between milk and gasoline to destroy the last great rain forests.
    I suppose our problems would be over faster if we fed gasoline to babies and poured milk in the tanks of the cars; what we are actually doing is equally insane.

    [Original Message]
    > Date: 11/19/2007 10:12:30 AM
    > Subject: RE: losing sight
    > Folks -- in the November 22 issue of New York Review of Books, there is an
    > article on Brazil. It seems that when fossil derived gasoline reaches
    > above $3.00 a gallon, Brazil is ready to generate oil from sugar cane at a
    > great rate because they will simply take over any wild lands required.
    > 11SEP2007

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    Fuel crops cultivate hopes and fears

    By Raphael Minder and John Aglionby, Financial Times 23 Nov. 2007, page 7. (Copyright notice)

    In the south of Mumbai, on a site that used to house an explosives factory, Prashant Kothari is now producing biofuel from jatropha, a robust bush whose cultivation is expanding rapidly across Asia.

    Growing jatropha has allowed Mr Kothari to make use of the vast but arid plot of land surrounding the factory and switch out of explosives production following a ban on an active ingredient, nitroglycerin.

    India alone is hoping to plant 33.5m acres of jatropha by 2012. From the Philippines to Burma (see sidebar), several Asian governments are setting equally ambitious targets for a crop whose fuel efficiency remains largely untested.

    Jatropha's development is a potential challenge to some countries that are much more advanced in planting other biofuel crops, notably Malaysia, which accounts for 57 per cent of the world trade in palm oil.

    While palm oil is the most energy-efficient crop, it is also more taxing on the soil, leading Greenpeace to warn this month of "a climate bomb" in Indonesia, where forests and swamps are being stripped to make way for palm plantations. Industry members, anal-ysts and non-governmental organisations are meeting this week in Kuala Lumpur to thrash out the certification criteria for sustainable palm oil.

    The biofuel sector is firmly established in many parts of the world, in particular ethanol made from sugar cane in Brazil and maize in the US. Asia's interest comes as the industry is still arguing over the best way forward. Two months ago the Organisation for Economic Co-operation and Development issued a stern warning that government subsidies for biofuels would lead to surging food prices and possible destruction of natural habitats.

    Variations in the Asian climate and soil conditions explain the wide range of crops, from coconut oil in the Philippines to pongamia in southern India. The goals also differ. For a nation such as Malaysia that exports 90 per cent of its palm oil, the worldwide biofuel push could bring a massive export bonanza. For India, where imports cover 73 per cent of petroleum needs, developing domestic biofuels is part of the government's effort to achieve energy security.

    At the same time, global biofuel demand is forcing some governments into a new balancing act between fuel applications and the traditional, essentially food related usage of such crops. Indonesia, the world's largest palm oil producer, is perhaps in the biggest quandary. High prices have been a boon for exporters but have triggered domestic protests over the rocketing cost of cooking oil.

    The government has responded by imposing a progressive export tax on the product, eliminating value added tax on domestic sales and subsidising stocks for the poor. Officials admit this is unsatisfactory in the long term and promise a more credible policy in the new year.

    Similarly, China has put a strict cap on the use of grain and oil as energy sources, to help combat surging food prices, which rose 17.9 per cent in October from a year earlier. Still, Chinese industrial demand is rising, as the country struggles to meet its energy needs, with industrial consumption of palm oil alone reaching 1.3m tonnes in the past financial year, more than double the amount in fiscal 2003. Liu Mengze of China National Cereals, a government body, expects China's biodiesel production to rise from less than 1m tonnes last year to 7m tonnes in 2010.

    For producers, meanwhile, the biofuel appetite has created what Yusof Basiron, head of the Malaysian Palm Oil Council, sees as "a potentially unlimited need for palm oil". Indonesia's production should rise from 17m tonnes this year to 18.5m next year, while 740,000 acres of oil palm plantations are expected to be planted every year for the next decade. Many play down the jatropha rivalry. "Where is the downstream processing to extract the oil?'' asks Carl Bek-Nielsen, vice-chairman of AAK, a Malaysian palm oil producer and refiner.

    Much of Asia's push into biofuels has been driven by the promise of huge shipments to Europe. In February, European heads of government agreed 10 per cent of European Union transport fuel requirements should come from biofuels by 2020. However, negotiations on how to achieve this are yet to take place, which could yield a compromise falling well short of Asian hopes. Concerns over palm oil's environmental impact are also proving influential.

    Rory Macrae, an EU lobbyist with GPlus Europe representing Malaysian palm oil producers, says: "There is no doubt Asian suppliers see the potential of the new EU targets but taking them for granted would ignore the realities of potential political back-pedalling in Brussels."

    Copyright The Financial Times Limited 2007
    We reproduced this article for reference reasons only.