4.5.1

Basics

Crambe could become a new oil crop in Brazil. Brazilian scientists are always looking for alternatives to soybean oil as a feedstock for biodiesel production. They think they have found an old plant that might fit well into Brazil’s agricultural production cycle and serve as an oil crop for biodiesel production. The plant is called Crambe. It is native to the Mediterranean area and was a popular plant in Europe during the Victorian era. It can be grown as a leaf vegetable, as ground cover, or as an oil crop. The seeds of the oil varieties have a very high oil content, 35% by weight compared to 19% in soybeans, and the oil has qualities very similar to rapeseed oil. The non-edible oil could be ideal for biodiesel production. Crambe is also being investigated in North Dakota as a potential source of vegetable oil for biodiesel.

In Brazil, Crambe is being promoted as a crop to grow after the main summer grain crops are harvested (double cropping). Approximately 80% of Brazil’s grain acreage is not followed by another crop during the dry season. The advantage of Crambe is that it has a high tolerance to drought and can complete its lifecycle in 90-100 days. It could be an ideal crop for small family farmers to plant after their grain harvest.

Since January 2010 the diesel fuel mixture in Brazil is B5 (95% petroleum diesel and 5% vegetable oil). This is expected to increase to a B10 mixture within the next 3 years. Currently, soybeans account for approximately 80% of the vegetable oil used to make biodiesel, but the government is promoting alternatives to soybeans such as palm oil, cottonseed oil, peanut oil, nut oil, castor bean oil, and now Crambe. Crambe production in Brazil is in its infancy, but if the scientists are correct, it could fit very nicely into Brazil’s agricultural production and blunt some of the critics that complain about using a food crop to produce energy.

Crambe abyssinica is believed to be a native of the Mediterranean area. The oil­seed crop contains inedible oil used for industrial products. It has been grown in tropical and subtropical Africa, the Near East, Central and West Asia, Europe, the United States, and South America.

Crambe can be grown as a spring crop. It can tolerate temperatures as low as —■4.4°C and requires 90-100 days from planting to reach maturity. Although relatively drought resistant, it requires moist areas for best yield. When fully grown, Crambe (which is related to rapeseed and mustard) grows to a height of

0. 6-1 meters and it has numerous branches. The disadvantage of Crambe is the fact that the seedcake must be detoxified to use it as animal feed.

4.5.2

I think that pellets from agricultural residues (so-called “agripellets”) are one of the most promising solutions for renewable energy. Feedstock like bagasse or empty palm oil fruits are in ample supply. As another example, I am in contact with the government of Sri Lanka, who inform me that half of all the tea plan­tations on the island have to be renewed. If you compress and dry the old leaves of the tea plants you have perfect agripellets, which can be sold all over the world.

What a treasure of biomass!

I was also informed that one of the large power companies in France is experimenting with agripellets from the seedcake of olive oil. Spain is the largest olive oil producer in the world so you can imagine what a new business is being developed here and how large the potential is.

The potential of agripellets is immense, since the cost of the feedstock is a fraction of raw materials for woodpellets and the global availability is around 10 times greater.

A big cost factor is the difference in the growth cycle between wood and agri­cultural produce. Wood like timber, teak, or eucalyptus needs 5-7 years to grow. Depending on the humidity and climate, sugarcane grows superfast in 6 months and does not have to be sown in again or replanted after cutting. It starts to grow again on its own! It is a semiperennial plant and needs to be resown after 6 years.

Thus, if you intend to produce woodpellets you must have a large surface of forests to assure a regular supply in your woodpellet plant. Imagine you have 2000 hec­tares of forest land. If you cut and replant 1 hectare per day over 320 days you have cut and replanted your forest in 6 years. This rotation system is the sound basis of sustainable agroforestry. With sugarcane you can harvest every 6 months. You stock the bagasse (leftovers) in a big pile and feed your agripellet plant whenever you need it.

Since Brazil is the number one producer of sugarcane worldwide, it has a huge agripellet potential. However, countries like Thailand and India are also big sugarcane producers, and can become major renewable energy producers.

Bagasse is the fibrous residue as biomass that is left after sugarcane is cru­shed. One tonne of cane produces about 250 kg of bagasse, which accumulates quickly. Large dunes of bagasse are a typical feature of Brazilian cane processing mills.

All Brazilian mills are self-sufficient in energy, producing more than enough electricity to cover their own needs. A growing number of mills are generating a surplus, which is sold to distribution companies and helps to light up numerous cities throughout Brazil.

Current and future expansion is anticipated to continue in South-Central Brazil, primarily on degraded pastures. As such, growing sugarcane in these areas does not increase competition for new land or displace other crops. If you think about sugarcane, forget the sugar and think about ethanol, biodiesel, biokerosene, electricity, and agripellets!

8.5

When China designed the 11th 5-Year Plan in 2005, it decided to promote planting of Jatropha across south-western provinces to help produce biodiesel and reduce China’s dependency on imported crude oil.

China is aiming to generate 1500 MW of clean power by 2020 by planting Jatropha and other forestry products that will be able to provide 6 million tonnes of biodiesel and biomass from which bioelectricity can be produced. Farmers will receive subsidies and seedlings in Yunnan, Guangxi, Sichuan, Hunan, and Guizhou provinces and regions to plant Jatropha.

China always does things big: 13 million hectares Jatropha is about the size of England! Jatropha in China grows on land reserved for forestry, as well as on land "unsuitable for agriculture,” including reclaimed mining areas and oil fields. In China, Jatropha is not displacing remaining original forests and energy crops are only allowed to be planted on marginal land. By law, energy plantations are not supposed to compete with agricultural, food-producing land. Around a quarter of China’s territory is desert. Vast swathes of Yunnan and Guizhou have been completely denuded of trees since the mid-1990s. Some of the plans to replant have focused on crop trees, while in other areas villages have been paid to allow replanting on critical areas like hilltops above rice paddies.

The State Forest Administration has set a target of 13 million hectares of bio­diesel plantations by 2020. Under Ministry of Science and Technology plans, biodiesel production would reach 12 million tonnes by 2020.

With 20% of the world’s population and 10% of its arable land, plans for rapidly increasing biofuel production in China have spurred domestic debate about the food security implications of a shift from food to energy crops. The primary feedstock for ethanol in China, which comprises the bulk of the country’s biofuel production, has been wheat and corn. Concerned about rising food prices, China’s State Council halted the use of grain crops for ethanol production, limiting biofuel development to non-grain energy crops. This strategy, if enforced and expanded to other major food crops, would presumably limit the range of developable oil-based energy crops as well. China is already a significant importer of edible oils like palm oil.

As a non-edible oil crop, J. curcas has emerged both in Chinese and international policy circles as a high potential feedstock for biodiesel production. Much of the focus on J. curcas production has been in Southwest China, where research on the plant began comparatively early and unused land is more readily available.

Jatropha is, in many ways, well suited to the complex landscape of Southern and Southwest China. The plant grows on diverse soil types and under a variety of climatic conditions, has a relatively short gestation period, and requires compara­tively low physical and human inputs. From a policy perspective, the two primary advantages of Jatropha over many other oil-bearing plants are indeed that it: (1) can grow in a variety of landscapes and thus does not necessarily compete with food production systems, and (2) requires fewer inputs, and thus has a higher energy return on investment and a lower carbon dioxide footprint than other oil-bearing crops, such as soybean or rapeseed. From a business perspective, a major strength ofJatropha is that its price, and thus the margins for Jatropha biodiesel producers, is not directly linked to international food prices. In addition, global warming, which results in more and more extreme weather patterns like floods, heat waves, and too much rain, decimates global grain crops. Jatropha is an extremely resistant plant and can withstand extreme weather patterns very well, as long as it does not freeze.

In Yunnan Province, Jatropha can typically grow at an altitudinal range of 600­1400 meters above sea level. Based on experience elsewhere, for reasonable fruit production the minimum required annual rainfall for Jatropha is around 600 mm with well-distributed rainfall. With adequate and well-distributed rainfall the plant

does not require irrigation. The yields are lower, but with huge plantations the total crop yield is still economically very interesting.

12.10.4

Airplanes of the future will be powered by anything from waste, vegetable oils to algae to animal or vegetable fat. Contrary to electric cars, we will not see airplanes running on electric engines — a 300-tonne airplane will simply not fly on electricity and a battery that provides electricity for 5000 miles has not yet been invented! Airplanes need liquid fuels where the kerosene is burned in a combustion engine and this liquid green fuel needs to have a very high energy content.

The alternative jet fuel sector right now is a competitive one with various technologies under development, and even with an economic slowdown and lower oil prices, airlines, engine makers, chemical companies, and governments are working quickly to address supply needs.

Fuel became the largest component of operating costs for US airlines in 2006, part of a relentless price spiral in energy prices that challenged the profitability of the industry. In addition to volatile oil prices, caps on carbon emissions, intro­duced in January 2012, have also prompted the sector to invest hundreds of millions of dollars into developing a more secure and affordable energy source.

That said, price competitiveness remains a key criteria. Alternative fuels will work if they are:

• Available in very, very large quantities.

• Priced equal to or below what airlines are paying today for fossil fuel kerosene.

As the availability of biofuels increases, the economies of scale will reduce prices: the more biomass becomes available, the lower the price and the more competitive kerosene will become.

As the aviation community develops alternatives, the idea is to alter the fuel, not the aircraft. If you look at aircraft, they are in essence long-life assets — they can be around for 15-30 years. If you can have a product that is in essence a drop-in fuel, you obtain the benefit very rapidly. Ultimately, as we have seen in previous chapters, geography will play an important factor in what plants are grown to create fuel. Camelina, a rotation crop in the northern United States and Australia,

Second Generation Biofuels and Biomass: Essential Guide for Investors, Scientists and Decision Makers, First Edition. Roland A. Jansen. r 2013 Wiley-VCH Verlag GmbH & Co. KGaA.

Published 2013 by Wiley-VCH Verlag GmbH & Co. KGaA.

is complimentary to wheat farming and a likely contender for US aviation. Similarly, Jatropha, a shrub that grows well in heat, will likely be cultivated in China, India, Brazil, or Africa. Sugarcane is also ideal in Brazil. Long-term, bio­fuels will come from hallophytes (plants that grow in salty conditions), algae (which appears to deliver high oil yields), or animal fat.

Unless there is demand for a feedstock, farmers will not plant it. Also, when other grains are highly priced, farmers will prefer to grow those grains and not biofuels. A good example is Camelina: wheat prices are high, so farmers grow wheat in Montana instead of Camelina.

17.2

The macroeconomic factors why commodity prices will rise further long term are very favorable.

The US Federal Reserve Board and other central banks maintain loose monetary policies. Excessive monetary stimulus, rapid credit expansion, and negative real rates always eventually lead hard assets, such as real estate, commodities, and precious metals prices, to rise as more and more money chases a limited amount of commodities.

Rising government budget deficits worldwide (at both federal and state levels) will add significant pressure to depreciating paper currencies, in turn providing another factor for rising commodity prices.

The US budget deficit in 2012 alone is bound to reach $1.327 trillion. Just below record levels but still a massive amount to pay back to the lenders.

Central banks can create money out of thin air — a bank can issue a new bond with a few strokes on a keyboard, but it takes many years to increase global copper, zinc, or silver production. It takes an oil company 10 years to build a new refinery. Commodity production elasticity is low. Meanwhile, the combined broad money supply of the top 35 nations has risen by around 50% since April 2001.

Do not forget: commodity prices can rise even in recessions. During the 1970s, when US inflation was around 9% a year, the US economy was in a major recession — yet commodity prices kept on rising.

As the global economy expands, the demand for commodities will rise corre­spondingly and with it commodity prices. An economic recovery generally demands a higher usage of commodities, resulting in higher commodity prices. Another point worth noting is that commodity prices increase significantly in periods immediately after the end of a recession.

It is to be noted that many of the other commodities, such as soft agricultural commodities, are either derived from, or produced with, oil and gas products. In the United States, the food people buy in the supermarkets has traveled 1500 miles! Huge amounts of energy, water, fertilizers, and pesticides have been used to produce the food.

Maturing, disturbing geopolitical trends resulting in unstable markets and potentially adverse commodity distribution (e. g., Iraq, Saudi Arabia, Iran, Nigeria, and Venezuela) are going to cause commodity prices to rise.

The conditions in the commodities markets today are very different from the last 20 years. Since commodity prices were in a severe bear market since 1980, little new capacity has come on stream in the last few years with the result that, for instance, the mining capacity utilization rate now stands at 95% or higher. In addition, from the time exploration begins to the time new substantial reserves come into production, a minimum of 7 years elapses. Therefore, production capacities for most industrial commodities cannot be increased meaningfully in the short term, which means that cycles of rising commodity price tend to last 15-30 years.

Increased investment flows have helped improve most valuations, but com­modities as an asset class are still emerging, and investors have significant opportunities to gain exposure and make gains in the medium to long term. This contradicts the view among some market participants that most actively traded commodities have already seen their price highs for now and could fall from their current levels.

1.5

When the moisture conditions are good, germination needs 10 days. With seeding in the month of May, a stem length of 1 meter can be reached after only 5 months of growth.

In permanently humid equatorial regions, flowering occurs throughout the year. The fruit development needs 90 days from flowering until the seeds mature. Further development corresponds to rainy seasons — vegetative growth occurs during the rainy seasons and little increase in plant growth takes place during the dry season. Old plants that are not pruned can reach a height of up to 5 meters. With good rainfall conditions, nursery plants bear fruit after the first rainy season, with directly seeded plants bearing fruits for the first time after the second

rainy season. Around 75% of current Jatropha plantations around the world are not irrigated and are simply watered with rainfall. This is a sharp contrast to criticism of environmentalists, stating that Jatropha uses too much irrigation.

3.1.17

The World Bank has backed the controversial practice of countries selling large tracts of agricultural land to overseas investors, but is urging vendors to demand much more to increase their farming productivity and peoples’ livelihoods. However, in a long-awaited report on the so-called "global farmland grab,” the multilateral donor organization cautions that investors need to recognize "tech­nical and economical challenges” in the host countries, which in some cases are exacerbated by "limited recognition of local rights” and "highly centralized approval processes.” "When done right, larger-scale farming can provide oppor­tunities to poor countries with large agricultural sectors and ample endowments of land,” the report states (http://farmlandgrab. org/15303).

The study is the broadest yet of the rapidly growing trend in which countries or their proxies invest in overseas land to boost their food security. It gained notoriety after an attempt in 2008 by South Korea’s Daewoo Logistics to secure a large chunk of land in Madagascar for a very low price and vague promises of investment (see above).

"The magnitude and often speculative nature of land transactions observed recently has caught many actors by surprise,” the World Bank says in its report Rising Global Interest in Farmland: Can It Yield Sustainable and Equitable Benefits?, It adds: "Demand for land acquisition continues and may even be increasing.”

Critics, including prominent international NGOs like Oxfam, believe the deals are a form of neo-colonialism.

The World Bank is proposing a seven-principle code of conduct for investors and host countries, including respecting local land rights, ensuring food security, ensuring transparency and good governance, consultations with those involved, responsible agro-investing, social sustainability, and environmental sustainability.

The multilateral organization also suggests building on the experience of the Extractive Industry Transparency Initiative (EITI; www. eiti. org), which commits governments to disclose revenues from oil and mining groups to improve trans­parency on the deals. "The EITI provides an interesting model that can inform much-needed efforts to improve land governance,” the report states.

3.9

The world urgently needs renewable fuels that have a positive energy and carbon dioxide balance, and that can be produced at competitive costs. Such bioenergy sources should preferably not be agrifuels like ethanol from corn, whereby agri­culture and agricultural land compete with fossil fuels. Agricultural land should be reserved to produce food for humans and animals only; nor is deforestation a sustainable path to a balance between society and nature.

Second Generation Biofuels and Biomass: Essential Guide for Investors, Scientists and Decision Makers, First Edition. Roland A. Jansen. r 2013 Wiley-VCH Verlag GmbH & Co. KGaA.

Published 2013 by Wiley-VCH Verlag GmbH & Co. KGaA.

One of the attractive solutions, combining the essential factors of sustainable energy production and producing a social impact, is offered by the production of biofuel from Jatropha. A socially responsible investment plan with Jatropha becomes a repetitive process with a "snowball effect” over time: contrary to a stand-alone charity transaction, a Jatropha plantation bears fruits for 50 years, can have one or two crops annually, and produces new seeds that are planted in nurseries. After 6 months the new plants are strong enough to be planted in new plantations, providing new jobs.

Jatropha can be seen as a means of economic empowerment, social improv­ement, and poverty alleviation within marginalized communities. Jatropha is a valuable multipurpose crop to alleviate soil degradation, desertification, and deforestation, which can be used for bioenergy to replace petrodiesel, for soap production, and for climatic protection, and hence deserves specific attention.

Jatropha can help to increase rural incomes, self-sustainability, and alleviate poverty for women, the elderly, children, and men, tribal communities, and small farmers. It can also help to increase income from plantations and agroindustries.

Although mechanized harvesting of the crop is feasible, the establishment and operation of large Jatropha plantations creates substantial employment potential for a rural population. This is considered to be one of the most interesting aspects of the crop because it allows social and economic development in rural areas. Currently, there are no crops that can create a substantial number of new jobs — except energy crops. Most of the bioenergy crops we are accustomed to can be harvested mechani­cally. Jatropha, on the contrary, requires a considerable number of workers. The standard number is one worker per hectare for the cultivation of the plants and for harvesting the oil seeds. However, it very much depends if the cropland is flat or hilly.

For small farmers, this is a very important development: they now have an energy plant available for which the risk of overproduction does not exist — the economic phenomenon that has been so disastrous for millions of poor farmers. With Jatropha, the farmers will, for the first time in their lives, find a stable market with fewer relative risks. The cultivation of Jatropha can be promoted as a means of economic empowerment, social improvement, and poverty alleviation within rural communities, especially in tropical and subtropical countries with underdeveloped and developing economies.

Biodiesel from Jatropha has a strong carbon dioxide balance. During the pro­duction of the crop, relatively low amounts of fossil energy are needed; much of the production consists of manual labor. This makes the balance better than biodiesel made from, for example, rapeseed. The crop can grow wherever tem­peratures are high enough. It is a tropical plant, but it uses much less water than other energy crops, because of its highly efficient use of water.

6.3

Devastating floods in Pakistan and Russia’s heatwave match predictions of extreme weather events caused by global warming, even though it is impossible to blame mankind for single severe weather events, scientists say.

The year 2010 was the warmest since reliable temperature records began in the mid-nineteenth century, beating 1998, mainly due to a build-up of greenhouse gases from fossil fuels, according to the UN World Meteorological Organization (WMO; www. wmo. int).

"We will always have climate extremes. But it looks like climate change is exacerbating the intensity of the extremes,” said Omar Baddour, Chief of Climate Data Management Applications at the WMO headquarters in Geneva.

Recent extremes include mudslides in China and heat records from Finland to Kuwait — adding to evidence of a changing climate even as UN negotiations on a new global treaty for costly cuts in greenhouse gas emissions have stalled.

Reinsurer Munich Re (www. munichre. com) said a natural catastrophe database it runs "shows that the number of extreme weather events like windstorm and floods has tripled since 1980, and the trend is expected to persist.”

In 2010 the worst floods in Pakistan in 80 years killed more than 1600 people and left 2 million homeless. Russia’s worst drought in decades led to fires that have almost doubled death rates in Moscow to around 700 per day. Nearly 1500 people died in landslides and flooding caused by months of torrential rains across China, the Ministry of Civil Affairs said. Baddour said one cause of a shift in monsoon rains in Asia seemed to be a knock-on effect of "La Nina” — a natural cooling of the Pacific region. One study concluded that global warming had doubled the chances of heatwaves similar to the scorching summer of 2003 in Europe, in which 35 000 people died. Those temperatures could not convincingly be explained by natural variations.

Despite the "top-down” global treaty rules of Kyoto and Copenhagen, and the unwillingness of politicians to compromise and work together to reduce carbon dioxide, we are witnessing an unprecedented wave of "bottom-up” initiatives from companies worldwide to local governments to go green. More and more countries are introducing climate change legislations to curb carbon emissions, from China, Australia, or Brazil.

The United States, the number two greenhouse gas emitter behind China, is the only major industrialized nation with no law to cut emissions.

Plant state-of-the-art technology and flexibility in the production of sugar and ethanol characterize the typical Brazilian plant. The production and use of ethanol in Brazil provides a reduction of up to 90% in greenhouse gas emissions compared to gasoline. Between their launch in May 2003 and May 2008, flex-fuel cars accounted for a reduction of 40 million tonnes in carbon dioxide emissions. Figure 13.1 shows that the number of flex-fuel cars in Brazil zoomed from 2003 to 2007 from zero to 2 million units, while sales of gasoline powered cars in the same period declined from 1 million to 200 000 units (Figure 13.1).

13.9

Fuel Consumption

Sugarcane represents 18% of the country’s total energy supply, second only to fossil fuels. It is the feedstock for multiple forms of food and energy such as:

• Sugar.

• Bioelectricity.

• PET (polyethylene terephthalate) products (e. g., biodegradable bottles).

• Biofuels: ethanol, biodiesel, and biokerosene!

•

Agripellets.

It is also interesting to note that this huge country called Brazil with a popu­lation of close to 200 million inhabitants is at the bottom of the gasoline con­sumption table compared to other gas-guzzling states (Table 13.2).

13.10