Many countries in the world do not allow you to acquire agricultural land. Many countries in Africa and Asia do give 50-year concessions to cultivate state-owned or

locally owned land, but it is often not possible to actually own the land. Good options to purchase vast stretches of agricultural land are New Zealand, Romania, Canada, Australia, and the United States. Brazil is becoming more and more restrictive towards foreigners who want to buy land. A big issue is the logistics. Is there an infrastructure to transport the crops from the fields to the harbor? Do you have good local partners? If you do not want the hassle of managing it, you can also invest in many well-run agricultural funds, which buy land and grow grains, feed cows, grow eucalyptus wood, and so on. Often you must have a long financial foresight: you might block your money for 6-10 years without an exit possibility. Agricultural land in the United States increased in value on average 25% in 2011 and the same story counts for Brazil.

20.2.2

invest in Trees

There are excellent funds that invest in timber, acacia, and eucalyptus wood for you. You must have a long foresight, because wood grows slowly. However, if you own the land as well (the number one choice is Brazil) you will double your money every 5 years. Contact me if you need further advice. A good example of a forest investment is the endowment of Harvard University, which has bought 50 000 hectares of forests in Romania.

20.2.3

Fuel currently used for turbine jet engines is refined from crude oil and is kero­sene-based with selected additives to provide the desired properties. Jet fuel is an energy-dense hydrocarbon fuel. The international jet fuel, called Jet A-1, has a specific energy of 43.15 MJ/kg and an energy density of 34.7 MJ/L, has low freezing and high flash points, and relatively low viscosity, making it ideal for long­distance flight. At least four standards exist for jet fuel:

1. Jet-A is the standard fuel for commercial and private US aviation and has a freezing point below —■40°C.

2. Jet A-l is the standard fuel for commercial and private European aviation and has a freezing point below —47°C.

3. Jet propellant 8 (JP-8) is the US military and NATO standard for jet fuel used in military aircraft, and has the same freezing point as Jet A-1.

4. Synthetic paraffinic kerosene (Bio-SPK). ASTM D7566 synthetic jet fuel: aviation turbine fuel containing synthesized hydrocarbons.

The Bio-SPK fuel used in test flights by airlines like Continental, KLM, Japan Airlines, TAM, and Air New Zealand either met or exceeded all of the performance specifications for jet fuel. In addition, the Bio-SPK jet fuel demonstrated a higher energy density per unit mass than typical jet fuel, so airplanes could fly a longer distance using less fuel. Carbon dioxide emissions were reduced substantially as well. For all of the test flights, the blended biofuel displayed no adverse effects on any of the aircraft systems (see Chapter ).

17.7

Royal Dutch Shell has finalized establishment for a biofuel venture that could dominate Brazil’s ethanol market and provide a platform for the export of the alternative energy source around the world.

Shell has agreed to set up a 50/50 joint venture with Brazil’s Cosan (cosan. com. br), the world’s biggest producer of ethanol from sugarcane, which the companies value at $12 billion. The new company is called Raizen. Raizen is a good example of the consolidation taking place in the Brazilian ethanol industry, which is still very fragmented and owned by local families.

Under a Memorandum of Understanding, the Shell-Cosan venture would include about 75% of Cosan’s assets, including its 2 billion liters of annual ethanol production capacity as well as its sugarcane processing mills, cogeneration power plants, and ethanol trading company. Shell would pay Cosan $1.62 billion to take its half-stake in the company’s core asset base. It would also contribute its 2740 petrol stations and other fuel-distribution assets in Brazil. Together, the joint venture would control almost 4500 Brazilian petrol stations that would pump Cosan’s ethanol fuel.

The joint venture will not immediately market Brazilian ethanol through Shell’s global distribution network. Demand for the joint venture’s ethanol in Brazil exceeds Cosan’s production capacity.

21.5

JOil

Singapore is a real clean energy research center in Asia. A good example is the collaboration between Tata Chemicals, Toyota Tsusho, and the Singaporean sovereign fund Temasek. They have set up the research company JOil PTE Ltd.

(www. joil. com. sg). This research company is developing the domestication of elite cultivars of Jatropha through tissue culture technology. The goal is to develop large-scale energy crops with high oil yields per hectare. JOil is experimenting with Jatropha in China, Thailand, India, the Philippines, Indonesia, and Kenya. The company is convinced that Jatropha can become the leading feedstock for the aviation, automotive, and power sectors.

21.6

Others

Other large companies and institutions investing in Jatropha include:

• Daimler: reviving its Jatropha activities by planting 100 hectares in India

• Toyota Tsusho: developing large-scale plantations in the Philippines.

• India Oil Corporation: planted 1000 hectares and planning to scale-up to 10 000 hectares.

• China National Offshore Oil Corporation (CNOOC): established a 60 000-tonne biodiesel plant in Hainan fueled by Jatropha oil.

• TNT: planting 24 million Jatropha trees in Malawi for fuel production.

in

22

Continental Airlines has successfully demonstrated the use of algae as an aviation fuel in a 2-hour test flight at George Bush International Airport in Houston. The flight was the first test of biofuels by a North American airline, the first to utilize algae as a biofuel feedstock, and the first biofuels test flight in a two-engine jet (www. biofuelsdigest. com/blog2/2009/01/08/continental-airlines).

200 | 19 Airline Jest Results with Biofuels

The Boeing 737, powered by CFM engines, operated with a 50% biofuel blend in the right-side engine during the 2-hour test program, which included a full-power take off, a climb to 25 000 feet including a fuel pump switch-off, a cruise at 37 000 feet, deceleration/acceleration, descent, engine restart without starter and engine restart with starter, approach and go around, and landing. Preliminary data showed that the engines performed as predicted and the test flight was completed without a hitch.

The biofuel for the flight was created by UOP from Jatropha and algae. The fuel mix included 50% Jet A, 47% Jatropha, and 3% algae.

19.6

You want to own commodities in the ground, not derivatives at Citigroup.

Marc Faber — investment analyst and entrepreneur.

Many people have already pursued this dream. Sometimes investors run into trouble when they have to finance and cultivate the plantations during the 5-6 years before they see any return on their investment. I receive phone calls from plantation farmers in Africa regularly to refinance them. Compare it like this: if you and me come to the conclusion that there is a lack of semiconductors in this world, we can build a factory that produces semiconductors, for instance, in Taiwan or the United States. With a production time of 1 year, I am sure we can churn out as many semiconductors as the market can absorb. With Jatropha, for instance, it is very different: we need 5 years before this plantation plant reaches full maturity to yield hopefully 2-3 tonnes of oil per hectare per year. Meanwhile, we have to pay for all the costs, the labor, the fertilizers, the water, the concession rights and so on. A lot of companies I know did not survive these first 5 years. If you still choose the route of having your own plantation I think it is a better option to participate in an existing plantation that will reach maturity soon. A lot of plantation companies need financial injections and I get requests regularly.

If you are the proud owner of a mature Jatropha plantation somewhere around the equator, your investment could look like this:

• Every hectare absorbs 40 tonnes of carbon dioxide a year and you can receive carbon credits, provided you registered your plantation at the start of the project,

• Every hectare produces 1-3 tonnes of crude jatropha oil a year; market value in 2012: $1000 per tonne.

• Every hectare produces 6 tonnes of organic fertilizer; market value in 2012: $300 per tonne.

• Your plantation can produce active carbon or polyol — renewable packaging material.

• Your plantation provides jobs to the poorest people on Mother Earth.

• Your customers are airlines, refineries, commodity trading firms, cruise ship companies, chemical companies, and so on.

• Your crude oil production costs (in developing countries) are around $50-60 a barrel, while crude oil is selling at $100 a barrel (April 2012).

• The plantation gives you an annual crop over 45-50 years.

Now you understand that the return on your capital can be 20-30% a year on a fully grown Jatropha plantation, when Mother Nature provides your plantation with rainwater and no major surprises like floods, droughts, and the like occur. However, you will need a lot of time, patience, and financial muscle to reach this goal and recuperate all of the initial costs you have incurred during the first 5 years.

20.2.4

Following the success of flight trials by Continental Airlines, KLM, Air New Zealand, Japan Airlines, and others, biofuels are now certified as safe and appropriate for commercial use. This was a very delicate process and a political balancing act, since safety is always a big issue.

Certified bio jet fuel is now recognized worldwide as an absolutely safe fuel to fly with it. Up in the air you have a freezing point of —54°C so the jet fuel must remain liquid at very low temperatures. Also, at 10 000 feet you have three dimensions instead of two here on the ground. If your car engine stops working you just get out of your car. With three dimensions it is slightly different!

The aviation industry has been working closely with fuel specification bodies, such as the American Society for Testing and Materials (ASTM) International and the UK Defence Standardization agency. The approval process had three parts: the

test program, the original equipment manufacturer internal review, and a deter­mination by the specification body as to the correct specification for the fuel. The approval process has looked at a minimum of 11 key properties, including energy density, freezing point, appearance, composition, volatility, fluidity, and many other characteristics, which would make it fit for aviation use. A 50/50 blend of biofuels mixed with Jet A-1 fuel has been certified in 2011. Due to recent advances in research and technology, aviation biofuel might be available for commercial use within 2-3 years, once the airlines can buy sufficient quantities of feedstock.

Now that biofuels for aviation are a confirmed viable option and the certification process has been concluded, the biggest challenges is cultivating the required quantity of feedstock. The worldwide aviation industry consumes some 1.5-1.7 billion bar­rels of Jet A-1 annually (about 250 billion liters or 65 billion gallons). Analysis suggests that a viable market for biofuels can be maintained when as little as 1% of the world’s jet fuel supply is substituted by a biofuel (or, put another way, 10% of the world’s aircraft fleet is running on a mix of 10% biofuel and 90% Jet A-1). Thus, when will the industry be able to reach that point? I think it will not happen before 2015. Some parts of the industry are aiming to operate fleet using 25% biofuel by 2025, which would be increased to 30% by 2030. However, it is necessary to produce sustainable feedstocks on massive commercial-scale quan­tities for these targets to be reached.

17.8

astm

In September 2009, a new jet fuel approval framework for alternative fuels (ASTM D7566) was announced, along with initial approvals for using certification goals for 2011 to include the approval of Bio-SPK fuels from oil seed plants such as Camelina and Jatropha. The criteria for fuel approval and also for moving forward with the approval of new process types (fermentation, pyrolysis) along with how to engage new suppliers in the approval process are part of this new framework.

The aviation community sees the introduction of renewable jet fuel alternatives as an essential component for meeting its environmental objectives, including achieving carbon-neutral growth in the next decade. The potential benefits go beyond greenhouse gas emissions, with alternative aviation fuels showing promise in contributing to the airlines’ efforts to minimize small particulate matter emissions affecting local air quality.

17.9

22.1

Conclusions

The biodiesel and biokerosene industry is entering a new era of transition towards alternative feedstocks, emerging technologies, and revised government policies favoring sustainable feedstocks and fuels. Each of these transitions offers considerable investment and growth opportunities for investors and entrepreneurs.

The global markets for bioenergy are experiencing a period of rapid, transitional growth, creating fantastic investment opportunities. The first-generation bioe­nergy markets in Europe and the United States have reached impressive pro­duction capacity levels, but remain constrained by feedstock availability, and agricultural priorities. In the BRIC nations of Brazil, India, and China, in the European Union, and in the United States, billions of government infra­structure dollars to develop renewable energies are spawning hundreds of new opportunities for feedstock development. I hope the future will show that important technological improvements will unfold in second-generation bio­fuels, and that the first generation will remain reserved for food production for humans and animals.

A fundamental transition in global fuel production is now happening. In 2007, there were only 20 oil-producing nations supplying the needs of over 193 nations. Today, every country in the world producing biofuels. The world has entered a new era where emerging market nations around the equator are becoming become big producers of global green energy fuels.

22.2

Brazil’s largest airline TAM announced on 23 November 2010 that it had suc­cessfully conducted what it called the first experimental flight in Latin America using aviation biofuel. TAM said on YouTube that the 45-minute flight of an Airbus A320 using biofuel made from the seeds of J. curcas took place on 22 November 2010 off the coast of Rio de Janeiro. The statement said the biofuel was mixed half and half with conventional aviation kerosene. The experimental flight was part of a joint project between TAM, Airbus, and engine manufacturer CFM International. CFM International is a joint venture of the US-based General Electric Co. and France’s Snecma. TAM stated that cultivating more Jatropha in Brazil does not threaten food production or supply because is not edible, and can be planted along pastures and food crops. TAM also claimed that studies have shown biofuels made from Jatropha produce 65-80% less carbon emissions than petroleum-derived aviation kerosene.

The company wants to honor its social and sustainability commitments through such an initiative. Brazilian raw materials are used in the production of this bio­fuel, resulting in significant economic and social gains. A source of aviation bio­kerosene, the biomass is 100% Brazilian, and is the result of family agricultural projects and large farms in the hinterlands of Brazil that have been devoted to the pioneering cultivation of the Jatropha plant.

Through the Brazilian Association of Jatropha Producers (Associacao Brasileira de Produtores de Pinhao Manso (ABPPM); www. abppm. com. br), TAM acquired Jatropha seeds from producers in the north, southeast, and center west of Brazil. These were then transformed into a semirefined oil that was shipped to the United States, where the Jatropha oil was processed into biokerosene that was mixed with conventional aviation kerosene in a 50/50 mix.

Through a joint effort with ABPPM, TAM intends to study the commercial — scale development of sustainable Jatropha production, with an eye to transforming it into aviation biofuel. The work carried out by ABPPM shows that there are currently 60 000 hectares of land in Brazil with Jatropha plantations. Considering

the natural resources and the favorable climatic conditions in Brazil, a large amount of degraded pastures could be recovered with the plant. To be able to attain commercial-scale output, estimates suggest that it would be necessary to expand the cultivated surface to about 1 million hectares — sufficient to service approximately 20% of domestic consumption and demand. I think this target is very well achievable, compared to sugarcane, where 9 million hectares have been planted.

Different plants can be the right feedstock for different parts of the world. Any solution should be sustainable with no impact on people, land, food, or water and should involve short logistical distances. It should also create new jobs for the local population. Thus, planting Jatropha locally in Brazil is a perfect solution for that country.

The cultivation and harvest of Jatropha, done in a responsible fashion, adds social and economic value to local communities, and does not compete with the production of food or potable water sources, complying with the principles set out by the Sustainable Aviation Fuel Users Group (SAFUG; www. safug. org), a group TAM joined on 11 November 2009. The group is made up of large international airlines whose aim it is to speed up the development and marketing of new sus­tainable fuels for the aviation industry.

Beyond the requirements of SAFUG, TAM also follows the concepts and criteria established by Roundtable on Sustainable Biofuels (RSB) — a renowned interna­tional organization that is acknowledged for its technical and scientific prestige. RSB’s criteria include best production practices, and the use and transportation of biofuels with regard to social, environmental, and economic responsibilities (see Chapter 7).

19.7

Agroindustrial and forestry residues, which are byproducts of key industrial and economical activities, stand out as potential raw materials for the production of renewable fuels, chemicals, and energy. The use ofwastes is advantageous as their availability is not hindered by a requirement for arable land for the production of food. Europe does not produce enough waste, and woodchips and palm kernel shells must be imported from non-traditional sources. Big investment opportu­nities are on offer here.

The crushed stalk of sugar cane (bagasse) is also an obvious biomass choice. Other agricultural byproducts are corn straw, wheat straw, rice straw, empty palm fruit bunches and rice hulls, and grass and forestry materials. Residues from citrus, coconut, and cassava processing also deserve attention as feedstock for the development of new and profitable activities. The industrial demand for renewable energy from biomass is growing exponentially and demand is out­growing supply.

The huge opportunity for woodpellets and agripellets lies in the fact that tech­nologies for pellet production and pellet use are fully developed and ready for the market. Moreover, they are highly competitive and have a wide range of benefits

compared to the use of fossil fuels. What is still missing is a general awareness of the potential and the opportunities associated with pellet use.

So what is required if you start a the woodpellet production plant? Wood and other biomass sources mentioned above can be used for pellet-making material and you will need long-term off-take agreements with wood mills to deliver the woody biomass to you. I once visited a ultra modern pellet plant in Belgium with a pellet production capacity of 100 000 tonnes. Unfortunately, they do not have enough wood delivered to them so they only can produce 50 000 tonnes! Different materials have different characteristics. It is important to get precise figures about the calorific value, ash, and nitrogen content of your pellet feedstock.

The first step is turning logs into chips and then turning the chips into a fine dust ready for the pellet mill. The moisture content of the particles must be mon­itored. If the particles have a moisture content over 15%, a drying solution will be required. If you want, for instance, to pelletize virgin timber the moisture content will be around 50% and drying will definitely be necessary. The cost of drying can also be expensive. Drying equipment will take up 30-40% of the total investment.

Therefore, sourcing a material that has a low moisture content is crucial to make the pellet production plant profitable. After drying, the biomass can be condensed and pressed through stainless steel rings. When the material is pressed through the steel rings, temperatures are high and can go up to 90°C. The pellet is still soft and the moisture content is more than 10%. The pellet is then moved up by a conveyor and through into a cooler. A special air flow cooler can cool the pellet down to room temperature and evaporate the moisture of the pellet to make it firm enough for storage and transportation. The moisture content is usually between 6 and 10% after cooling. A steady material supply is necessary for running a pellet plant. For instance, a pellet plant with a capacity of 20 tonnes per hour must have at least 700 tonnes of feedstock daily.

20.2.5

Biokerosene research and test programs have taken place worldwide. The test results are the basis to support further sustainable biofuel development. The testing

engages fuel suppliers, engine companies, and the airlines as a team effort to address industry concerns about carbon dioxide emissions, safety, fuel availability, and cost.

The Bio-SPK fuel blends used in test flights have all either met or exceeded the performance specifications for jet fuel. For example, the Bio-SPK fuel blends demonstrated higher energy density per unit mass than typical jet fuel, enabling airplanes to travel further using less fuel. For all of the test flights, the blended biofuel displayed no adverse effects on any of the aircraft systems.

On 11 June 2011, the ASTM gave preliminary approval to use algae and Jatropha as a biokerosene. Final approval followed in August 2011.

18