By the end of 2015, all palm oil used in The Netherlands will be sustainable, as certified by the RSPO (see "Holland to use only sustainable palm oil by 2015”; www. commodityonline. com). This means all imported palm oil must come from renewable plantations and not from plantations that were planted where rain­forests used to grow. In November 2010, all palm oil suppliers and buyers in the Dutch market, united in the Dutch Taskforce on Sustainable Palm Oil, pledged to work collectively towards this goal. They did so in a Manifesto that was presented to the government of The Netherlands. It is the first time a country rather than a company has committed itself to using only sustainable palm oil.

Dutch business has long been closely involved in efforts to make the palm oil supply chain more sustainable. The country has been one of the frontrunners in this respect. The Netherlands calls on other countries in Europe, North America, and Asia to follow this example. The Netherlands has a huge palm oil industry in the harbor of Rotterdam with a number of palm oil refineries from international companies. Thus, The Netherlands is a leader in Western Europe by limiting palm oil imports to certified crude palm oil only.

It is my opinion that one day the European Union will implement this law for all 27 EU members, and maybe for other biofuels like rapeseed, soybean oil and Jatropha as well. Such a law will increase the demand and search for second-generation biofuels like Jatropha switchgrass and algae.

The palm oil industry has a fantastic chance to convert itselfinto a much more greener industry by using the 90% of the palm biomass that is presently just rotting away on the plantations in Malaysia and Indonesia.

4.4

There are five basic categories of biomass:

1. Virgin wood from forestry or waste from forest products: palm kernel shells, woodpellets, woodchips, sawdust.

2. Energy crops — high-yield crops grown specifically for energy applications: hybrid eucalyptus, Jatropha, Pongamia and perennial grasses like Miscanthus and Napier grass growing on marginal land, not fit for agriculture.

3. Agricultural residues: bagasse from sugarcane, corn husks, coconut shells, straw.

4. Food waste, animal fat, residues from food and drink manufacturing, prepara­tion and processing, such as used cooking oil from sunflower oil, tallow, and greases. Great examples of companies processing their waste are McDonald’s (oil) and Tyson Foods (slaughter residues, fats).

5. Industrial waste from manufacturing and industrial processes.

However, currently 99% of all biomass in these five categories is still not recy­cled. People do not have the knowledge or the financial means to recycle animal fat

into biodiesel.

8.3

An apple a day keeps the doctor away.

British proverb

A smile a day keeps a depression away.

Chinese proverb

China is the now the largest energy consumption market in the world. In 2009, China’s total energy consumption amounted to 3.10 billion tonnes of standard coal equivalent — an increase of 6.3% from 2008. China consumes twice as much diesel as gasoline; nearly 80% of commercial vehicles in China run on diesel.

In 2011, China’s economy grew by 9.2%, down from 2010’s 10.4% growth. In March 2012, Beijing cut its growth target for the whole of 2012 to 7.5%. In the first six months of 2012 China’s economy has grown at its slowest pace in three years due to slowing investments and falling demand in key markets such as the US and Europe.

The Chinese government is stimulating the economy again and in 2012 China’s central bank has cut the amount of money banks must keep in reserve in order to boost lending, and it also cut the cost of borrowing twice in one month.

China accounts for about a fifth of the world’s total economic output and any slowdown may hamper a global recovery. Currently, China relies mainly on coal and fossil fuels for energy production. Since 2006, China has surpassed the United States as the world’s biggest emitter of carbon dioxide.

China consumes twice as much diesel as gasoline due to widespread diesel use in public transport, cargo ships, and agriculture machinery. Nearly 80% of commercial vehicles in China run on diesel. In 2009, China consumed at least 144 million tonnes of fossil diesel fuel.

According to the US Energy Information Administration (www. eia. doe. gov), China will consume around 9.9 million barrels of crude oil daily in 2012. China’s own oil production only averages 3.4 million barrels per day, with over 6.5 million barrels needing to be satisfied by either imports or other energy sources.

In light of the rapid growth of the Chinese economy and rising consumption of energy, the Chinese government increasingly encourages the development and use of renewable energy sources. According to the Medium and Long Term Development Plan of China, the share of renewable energy used in primary energy consumption is to be increased to roughly 15% by 2020. The Energy-Saving Law of

China, which came into effect on 1 April 2008, also encourages the development and utilization of petroleum substitutes.

In April 2009, the Chinese Academy of Sciences released the 2009 China Sustainable Development Strategy Report, putting forward the strategies and objectives in the development of low-carbon economy in China (www. undp. org. cn/pubs/nhdr/ nhdr2010e. pdf). The objectives mandate energy consumption to decrease by 40-60% and carbon dioxide intensity (emission per unit of gross domestic product) to be lowered by 50% comparing to 2005 gross domestic product standards. Both Guang­dong and Hainanprovinces have initiated a focus in developing low-carbon economies.

According to the Law of Renewable Energy Resources, January 2006, the Chi­nese government mandates petroleum-selling enterprises to include biofuel that meets the China national standards into their fueling-selling system. In addition, the Chinese government has implemented various favorable tax policies and provided incentives to agricultural companies. The Project is qualified for gov­ernment grants from China’s State Forestry Administration, State Administration of Taxation, National Development and Reform Commission, Ministry of Agri­culture, and Ministry of Finance.

Figure 12.1 illustrates the energy consumption in China and Figure 12.2 illus­trates the top 10 oil importers in 2009. Figure 12.3 shows that the gap between China’s oil production and consumption is widening, and imports will have increase further. Figures 12.4 and 12.5 show that China has overtaken the United States in energy consumption, and dominates many commodity markets expres­sed as a share of global consumption.

12.7

The Sustainable Aviation Fuel Users Group (SAFUG; www. safug. org) is an airline-led industry working group. Current airline members include Air France, Air New Zealand, All Nippon Airways, Cargolux, Gulf Air, Japan Airlines, KLM, SAS, and Virgin Atlantic Airways. Boeing and Honeywell’s UOP, a refining technology developer, are associate members. More and more airlines are joining, such as Alaska Airlines, British Airways, Cathay Pacific, TUIfly, and Virgin Blue.

Since its launch in the fall of 2008, SAFUG has established a foundation of airlines, environmental organizations, research projects, and practices and prin­ciples that can help accelerate the commercialization and availability of sustainable biofuels.

SAFUG members have pledged to work through the Roundtable on Sustainable Biofuels (RSB) — a global multi-stakeholder initiative, consisting of leading environmental organizations, financiers, biofuel developers, biofuel-interested petroleum companies, the transportation sector, developing-world poverty alleviation associations, research entities, and governments (see Chapter 7). All RSB and SAFUG members agree that working across sectors, interests, and regions is the best approach to ensure the next generations of biofuels are developed in a sus­tainable manner.

Strategic efforts by SAFUG members and RSB stakeholders are focused on making renewable fuel sources available that can reduce greenhouse gas emis­sions, while lessening commercial aviation’s dependence on fossil fuels and potentially reducing aviation sector exposure to fuel price volatility. In addition to previously announced research projects on algae and Jatropha, the group will also launch a sustainability assessment of halophytes, a class of plants that thrive in saltwater habitat, later this year.

To be eligible for membership, SAFUG members must subscribe to sustain­ability criteria that stipulate that:

• Jet fuel plant sources should be developed in a manner that is non-competitive with food and where biodiversity impacts are minimized; in addition, the cultivation of those plant sources should not jeopardize drinking water supplies.

• Total lifecycle greenhouse gas emissions from plant growth, harvesting, processing, and end use should be significantly reduced compared to those associated with jet fuels from fossil sources.

• In developing economies, development projects should include provisions or outcomes that improve the socioeconomic conditions for small-scale farmers who rely on agriculture to feed them and their families, and that do not require the involuntary displacement of local populations.

• High conservation value areas and native ecosystems should not be cleared and converted for jet fuel plant source development.

Every part of the plant, including the seeds, leaves, and bark, is used in traditional medicine and for veterinary purposes. The oil has a strong purgative action, and is also widely used for skin diseases and to soothe pain caused by rheumatism. At the University of Sichuan in Chengdu, in the Institute of Life Sciences under the supervision of Professor Cheng Fang, scientists are experimenting with jatrophin — the toxic substance in the Jatropha fruit — as a medicine against lung cancer. Jatrophin is also used as an antiaging medicine and the Chinese army uses a spray based on Jatropha against skin burns. Thus, all in all, new applications are dis­covered nearly daily, and Mother Nature provides us more and more with homeopathic medicine that works very well.

The Indian Scientist Ashwani Kumar (www. science20.com) lists Jatropha as a “folk medicine” against many diseases: “In South Sudan, the seed as well as the fruit is used as a contraceptive (no guarantees), Colombians drink the leaf decoction for venereal disease, Cameroon natives apply the leaf decoction in arthritis, Cubans apply the latex to toothache, Colombians and Costa Ricans apply the latex to burns, hemorrhoids, ringworm, and ulcers.”

3.1.10

3.4.1

Jatropha in Ghana

This section deals with a thorny problem that occurs with all plantation crops, which is best described as "how to deal with the locals.” What counts for ananas, bananas, coffee, or cocoa, also counts for Jatropha. Some plantation companies are being accused of being "land grabbers,” expelling farmers from their own land. This policy is of course inexcusable. The only way to grow Jatropha successfully is to practice "socially responsible investing:” you earn your money, but you also do good and do well for the farmers. Some NGOs, such as Friends of The Earth, take great pleasure in regularly highlighting what goes wrong with Jatropha. They take a few bad examples, especially in India and Africa, and conclude that Jatropha in general is a useless plant (e. g., "Biofuel ‘wonder-crop’ Jatropha fails to deliver”; www. foei. org). I do not agree with that at all. In every industry imaginable there are bad cases, and in Jatropha farming there are good and bad examples as well.

So far very little research has been published about Jatropha in China, and I feel privileged to give you an in-depth view on plantations and best practices in China in Chapter 12.

We now turn to Ghana, which is becoming the largest plantation country in Africa south of the equator.

There is a scramble for land in Ghana by multinationals and local companies in partnership with foreigners vigorously pursuing plans for the cultivation of the Jatropha for its prized oil seed to produce biodiesel for export. According to Friends of the Earth, over 20 companies from various countries are in Ghana acquiring land to cultivate non-food crops and other crops for the production of ethanol and biodiesel, mostly for export. These companies come from Brazil, Italy, Norway, Israel, China, Germany, The Netherlands, Belgium, and India. They are culti­vating fields in the Volta, Brong Ahafo, Ashanti, Eastern, and Northern regions of Ghana. The main non-food crop that these companies are planting is Jatropha.

One of the companies, Agroils of Italy, is cultivating 10 000 hectares of Jatropha in Yeji in the Brong Ahafo region. The Israeli company Galten has acquired 100 000 hectares of land and an Indian company is requesting for 50 000 hectares of land from the Ghana Investment Promotion Council (GIPC) to cultivate Jatropha.

A company from The Netherlands has started a pilot project on 10 acres in the northern region and the Chinese are also undertaking a pilot project. Gold Star Farms Ltd. intends to cultivate 5 million acres of land to plant Jatropha for the production of biofuels for export. A Norwegian company, ScanFuel Ltd., has started operations outside Kumasi in the Ashanti region to produce biofuel. The company aims to start initial cultivation of Jatropha seeds on 10 000 hectares of land. The company, which has a Ghanaian subsidiary, ScanFuel Ghana Ltd., says its Ghanaian unit has contracted about 400 000 hectares of land, with up to 60% reserved for biofuel production, "not less” than 30% for food production, and the remainder for biodiversity buffer zones. Another Norwegian company, Biofuels Africa Ltd., the only one among the about 20 biofuels companies cultivating Jatropha to receive an Environmental Impact Assessment (EIA) permit from Ghana’s Environmental Protection Agency (EPA) which covers 23 762.45 hectares of its project area, is operating in two locations.

Even though Ghana has no policy, regulations, or structures in place for the biofuels industry, any company cultivating anything more than 10 hectares is required to conduct an EIA for approval by Ghana’s EPA.

All together, these companies are cultivating the Jatropha plant on millions of hectares of land with the hope of producing biofuels for export.

3.4.2

More than 4400 cubic meters of methane can be produced per hectare of Moringa per year. That is up to twice as much methane as can be produced per hectare per year from sugarbeet leaves — a common plant material for biogas.

4.9

Castor

Castor (Ricinus communis) was a neglected crop until recently. The oil can be used as fuel and the cake as a biofertilizer. The harvest can take place 4-5 months after planting. The seeds of the castor bean have an oil content between 40 and 50%, and the castor bean plant can grow as perennial in tropical climates. The plant can grow up to 10 meters in height. Castor bean can exhaust the soil quickly and regular fertilization is needed for continuous seed production. When irrigated, seed yields from castor bean can exceed 2000 kg per hectare.

Varieties and yield:

1. Aruna castor is short in height. It can give a yield of 2.5-3 tonnes per hectare in 120-150 days.

2. For rain-fed land, 5-7.5 kg of seeds is required per hectare.

3. For irrigated land 2.5-3.5 kg of seeds is required per hectare.

4.10

The EU Emissions Trading Scheme (ETS) aims to reduce the European Union’s greenhouse gas emissions and stimulate the deployment of low-carbon energy technologies. This energy and climate package sets emission reduction targets for greenhouse gases. By 2020 total emissions should be reduced by 20%.

The EU ETS is one of the key legislations of the EU climate change policy. It covers about 40% of the European Union’s total carbon dioxide emissions with 11 000 industries including power generation.

A cap-and-trade approach was chosen because it guaranteed a limit on a sig­nificant part of the European Union’s emissions, it was compatible with the emissions trading provisions of the Kyoto Protocol (adopted at the United States’ insistence, ironically), and it was the only other instrument available. The support for the scheme is based on its capacity to deliver in several areas and to ultimately maintain credibility to domestic audiences, including policy makers, business representatives, non-governmental organizations (NGOs), and the general public altogether.

Emissions trading (“cap-and-trade”) is an economic policy instrument used to control emissions by providing economic incentives for achieving emission reductions. The idea behind a cap-and-trade system as an environmental policy tool is simple and straightforward. An emission trading system sets an absolute limit (or “cap”) on the pollution that causes the problem on the amount of a pollutant that can be emitted.

Within the framework set by the cap, companies or sectors under the trading system are given credits or allowances that represent the right to emit a specific amount, keeping in mind that the total amount of allowances distributed cannot exceed the cap. Companies that can easily reduce emissions will do so and those for which it is more expensive will buy credits. By limiting the total volume of pollution and allowing trading between sources a price is put on every unit of the emissions concerned. This means that environmental pollution — that used to be an external effect of its operation and came “for free” as far as emitters were concerned — now comes at a cost and will have to be taken into account in choices about future behavior, just like any other production factor.

The EU ETS functions in cycles of 5 years. The next cycle starts in 2013. The revised law sets new framework rules for the ETS after 2013, most notably by setting a single European Union-wide emissions cap and gradually phasing out free ETS allow­ances for most of the installations covered.

Many European member countries in the European Union rely on coal for electricity generation. Germany obtains over 40% of its electricity from coal and is the largest consumer in the European Union. Coal also accounts for over 40% of the electricity mix in other countries, such as the Czech Republic, Bulgaria, and Romania, and provides 29% of the European Union’s electricity. Poland relies on coal for 90% of its electricity generation.

The power, cement, chemical, and paper industries are scrambling to buy bio­mass in order to lower their carbon dioxide emissions. It will be more difficult in the future to obtain finance from big banks: HSBC and BNP Paribas, for instance, have introduced standards that prohibit the financing of dirty coal-fired power plants.

Should the European Union’s proposed new ETS starting in 2013 force pro­ducers to buy carbon credit permits, these industries will be confronted with huge extra costs. I believe that, for instance, the mining industry in countries like Poland, the Czech Republic, and so on will not survive if they do not cofire coal with biomass in the future to lower their carbon dioxide output. At some point in time free carbon allowances from the European Union will be gradually phased out and huge pollution bills will be presented to them. In Poland alone, 100 000 people work in the mining industry. Thus, the power plants need to prepare for the near future to avoid major increases in costs. Ifthe coal industry does not adapt to modern times and the rules and regulations of the European Union, it will be forced to dismiss massive amounts of people, which could create civil unrest.

Currently, 1 million tonnes of biomass is burned or cofired in power stations in the United Kingdom. Experts predict that the demand for biomass will expo­nentially grow up to 60 million tonnes a year by 2020.

Europe in general does not produce enough biomass, and some countries industries, and utilities are importing biomass from non-traditional sources. These supplying countries with plenty of biomass are the United States, Canada, Russia, Africa, and Brazil. In some countries demand for wood is outstripping supply by up to 600%.

The Confederation of European Paper Industries (CEPI) estimates that Europe will have a biomass deficit of up to 210 million tonnes of wood across all sectors by 2020 (http://pubs. iied. org/pdfs/17098nED. pdf).

Investing in biomass plantations is becoming very attractive as crude oil prices rise and the cost of biomass production is falling, since it is not labor-intensive. Biomass plantations may also be able to generate additional revenue streams, such as by selling carbon credits.

All these restrictions for power plant emissions are stimulating EU members to expand their biomass plants and thus their capacity to produce renewable energy. Table 8.4 shows the expansion plans of all EU members.

The European Biomass Association predicts that by 2020 the European Union will use 100 million tonnes a year of pelletized biofuels from about 13 million tonnes in 2010 (http://ec. europa. eu/energy/renewables/transparency_platform/ doc/2010_report/com_2010_0011_3_report. pdf).

Let us take Poland as an example. Poland consumes around 80 million tonnes of coal per year, which makes it the 10th largest coal consumer in the world and the second largest in the European Union, after Germany. Ninety-two percent of electricity and 89% of heat in Poland is generated from coal, and according to the official Polish Government Energy Policy Strategy, coal will remain the key ele­ment of the country’s energy security until at least 2030.

Although Poland’s electricity mix is expected to become more diversified over the coming years, coal is perceived by policy makers as a strategic energy resource for the country’s energy security and its consumption is not expected to decline over the next two decades.

Historically, Poland has been an important producer and exporter of coal. In the 1970s, Poland became the biggest coal producer in Europe and until 1979 was also the second largest coal exporter globally, after the United States.

Between the 1990s and 2000s, the coal industry underwent major restructuring, which led to the early closure of many coal mines and a sudden decrease in production output. In fact, due to this restructuring process, Poland’s coal pro­duction has spiraled into a steady decline. More recently, coal imports have exceeded exports for the first time in history.

8.10

In a major boost for the biofuel sector, China decided to exempt taxes on pure biodiesel from waste animal fats and vegetable oils. Its new policy was actually retroactive from 1 January 2009, with taxes that had already been paid refunded, according to the Ministry of Finance and the State Administration of Taxation. The move was aimed at lifting the renewable resources sector while easing demand for petroleum and protecting the ecological environment. It was also expected to save biodiesel producers around 900 Yuan per tonne. It is hoped that biodiesel pro­ducers will now be more competitive in the fuel sector and this should help to guard against waste edible oils being reused for human consumption so as to ensure food safety.

13

We all know that oil is not renewable and that it is polluting our environment. As we analyze the oil markets daily, it is our conviction that non-OPEC countries like the United States, Mexico, United Kingdom, Indonesia and Norway are "over the top” in their oil production, and that slowly but surely their oil production will continue to decrease. This is the "Peak Oil” theory: more than half the reserves in these countries are gone and whatever effort is made or technology is deployed, less and less oil will be pumped up. On the other hand, we believe that OPEC members like Saudi Arabia, Iran, and so on, still have ample reserves and that they will reinforce their grip on the oil markets. So the big question is: what is the clean energy of the future? Is it energy from one source or will it be a combination of several energy sources? And which energy will be used less and less? I discuss this theme with many commodity experts and opinions are as diverse as there are commodities on Mother Earth.

Renewable energy from the first generation is basically vegetable oil from plants growing on agricultural land. However, with agricultural land plateauing in our world and the global population increasing from 7 to 9 billion people in the coming 30 years, agricultural land should be used to grow food for human beings and livestock, and not for producing gasoline or diesel for our cars. This is because less land will be available for agriculture. Only a country like Brazil, where there is still a lot of barren land that can be converted into fertile agricultural land, is a good exception. If a country has vast amounts of land, sugarcane production to make ethanol and sugar simultaneously can coexist very well. However, most countries do not have this luxury and shrinking agricultural land due to urbani­zation is the norm in our world. From 1950 to today the available cropland per person in our world has shrunk from 0.5 to 0.2 hectares. Are we heading towards "Peak Food”?

Today, the world’s farmers feed 7 billion people. Over the next 50 years, farmers will have to grow more food than has been produced in the previous 10 000 years combined. Will they be able to do it? Not without help. If farmers could just plant more acreage, there would not be a problem. In this book I show how it can be done with research, and systems like intercropping, double cropping, and ferti­lizing marginal land. Figure 1.9 shows the decline in the amount of arable land per person on Mother Earth.

Blame erosion, desertification, or urban development. Mother Nature will continue to mete out natural disasters — and the world’s population will continue to grow relentlessly. So get ahead of the curve. Invest in companies that invest in agricultural research and make agriculture more efficient.

1.10