We have to change towards a low-carbon society. The problem with carbon
dioxide is: we don’t smell it, we don’t see it, it is colorless, tasteless and invisible.
Al Gore — Speech at the Paul Scherrer Institute, Switzerland, 21 June 2010.

1.1

Commodity Cycles — Past and Present

In August 1998, John Wiley & Sons, New York published my first book on com­modities called Profits from Natural Resources. Oil was trading at $10 a barrel, nobody was paying attention to natural resources, and the high-tech bubble was in full swing. Every investor jumped on the bandwagon of the Internet and computer stocks like Microsoft, Yahoo, Oracle, and Amazon. In those days Amazon was trading at $5 a share — in August 2012 it was trading at $230 a share (and by owning Amazon stock for 10 years you would have enjoyed a few stock splits on the way up as well)! At the beginning of the first decade of this century very few people were seriously investing in the basic resources of our world. Although my timing was a little ahead of what was going to unfold, the analysis of the book (i. e. the coming commodity boom) was 100% correct.

This book is not about speculation. This is not another commodity book about trading techniques in gold, silver, or copper. This book is not about exchange — traded funds (ETFs), leverage, selling short, or high-frequency trading. This book is a guide to liquid renewable energies called second-generation biofuels and solid biomass. I think this is one of the best investments you can make today. Such an investment is "early stage.” It is like buying Microsoft at $5 a share. However, those investors who have the vision and the courage to get in early will reap the biggest benefits.

Before we dig into the subject of this book, I first need to give you the big picture of the commodity world. I shall give you the top-down view of the global com­modity world before we make our feet wet in biofuels and biomass.

It is essential to understand that natural resources are raw materials. It is only after their transformation from raw to a pure material that they can be used in

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.

industrial or consumer products. Depending on the sector, the resources we col­lect from Mother Earth first need to be found, then undergo one or more of processes like pumping, refining, drilling, harvesting, melting, roasting, drying, crushing, spinning, pressing, recycling, and condensing. In addition, the finished goods need to be transported and stored safely to become valuable basic materials. Raw materials are called “commodities” when they are traded uniformly in bulk, in large quantities. Wheat is a commodity, but diamonds are not. Is water a commodity? Some people say yes, other people say no. Open for debate!

This transformation of a raw material into a pure basic material can take many years. With the exception of fast-growing staple goods like soybeans, sugarcane, and wheat, so-called natural commodity cycles are long cycles. For instance, it takes 5 years to grow a coffee tree and 7 years for a rubber tree before we can collect the latex. Oil in the North Sea was found in 1967 and it was only in 1977 that you could fill up your tank at the gas station with North Sea gasoline. Thus, it takes years and huge investments before additional supplies of commodities become available, and sometimes billions of dollars are invested just to keep the present supply intact or to bring new supplies on stream with very meager results. This is case today with copper and oil.

However, there is one big difference from all the previous cycles: all the three super-cycles in the twentieth century were caused by supply constraints. Com­modity shocks like the Middle East oil embargo in 1973 and the Great Grain Drought in the Ukraine in 1972 were typically problems in the supply chain. This time, however, we not only have supply bottlenecks, but additionally we are wit­nessing a huge new demand from new markets. In Asia, the demand for raw materials is growing exponentially. Thus, I think this super-cycle will be very powerful in nature. Not only Asian countries, but also the United States, Brazil, India, and other large economies are experiencing rapid growth that is fuelling demand for all sorts of commodities. Energy is needed to drive growth, whereas metals and other basic materials form the inputs for what has been an explosion in infrastructure investments.

Imagine there is a lack of semiconductors in this world. We can go to India or China, build a factory, buy machines and robots, hire software and production people, and within 2 years we can produce as many semiconductors as the market can absorb. With raw materials it is a whole different story — the supply cycles of many commodities are very long, and at the same time the global demand for raw materials is exploding with rapid developing economies in China, India, and Brazil.

The global shortage of raw materials might not be resolved for some years also because of infrastructure bottlenecks and the long lead-time needed for new natural resources projects. A lack of investments in ports, in particular in Australia and Africa, is holding back imports and exports of important commodities such as iron ore and coking coal. If you go to cities like Singapore or Shanghai you can witness hundreds of ships waiting to unload or load cargo. A good example is steel. The current global bottleneck in the steel industry had its roots in the 1980s when the last commodity bull cycle ended and the former Soviet bloc economies opened

up to the West, making available extra capacity that took years to absorb. Since that time we have had 25 years of deflation, disinvestment, and lack of investments in drilling and mining. Now this oversupply of commodities has been consumed and absorbed. We are currently in a general supply squeeze, demand is booming, and it will take a decade before a sufficient supply of commodities or alternative energies comes on stream.

1.2

Jatropha is a champion of survival, and the plant is highly resistant to drought and pests. A palm oil tree lives for 20 years — the Jatropha plant life expectancy is about 50 years. Oil-bearing seeds are available in a small first crop during the second year of plant growth. Well maintained, 1 hectare can produce on average 2.5 tonnes of oil, which is 4 times more than soybeans and 10 times more than corn. For instance, 20 000 hectares of Jatropha plantations are the equivalent of 3 MW, which can provide electrical power to 5000 homes. However, these Jatropha sta­tistics are derived from small-sized plantations. Contrary to soybeans and corn, sufficient data derived from large-scale Jatropha plantations are not available yet.

A country like India is well suited for mass production of Jatropha biofuel. Despite monsoons and droughts, many parts of the country have a favorable cli­mate to grow Jatropha, there is an abundance of marginal lands, and labor costs are cheap. The Indian government has allocated about 40 million hectares of land to grow Jatropha — that would allow India to replace 20% of India’s diesel con­sumption in 5 years.

The optimal growing conditions for Jatropha are:

• Latitude: 30° north-300 south in a band around the equator.

• Average temperature: 20-30°C.

• Average annual rainfall: 600-2400 mm.

3.1.14

A fairly recent analysis of water use in biofuel crop production finds that Jatropha uses large quantities of water, when irrigated. Researchers from the University of Twente in The Netherlands report that Jatropha requires 5 times as much water per unit of energy as sugarcane and corn, and nearly 10 times as much as sugar beet — the most water-efficient biofuel crop, according to the same study (http://ww. newenergyplus. com/bioelectricity/bioenergy-claims-more-water).

Coauthor Arjen Hoekstra says it is true that the plant can grow with little water and can survive through periods of drought, but to flourish, it needs good growing conditions just like any other plant. "If there isn’t sufficient water, you get a low amount of oil production,” Hoekstra says.

So far I agree with Hoekstra. Before a plantation is started, rainfall statistics must be assembled to get a good picture of whether the plantation needs irrigation or not. In particular, large plantations in relative underdeveloped areas of the world will only be fed by rainfall. I argue that if the plantation is large enough, the yield per hectare will indeed be much lower, but due to the size of the plan­tation the yields are still very interesting for all parties involved. Therefore, I argue that this study is very academic, and is correct on paper and in the laboratory, but far away from the real plantation management of a large operation.

Hoekstra and his colleagues assessed the water footprint of 13 different biofuel crops. Their calculations included regional estimates ofhow much rainwater each crop received and how much additional water would be required through irrigation for optimal growth. The study also considered evaporation rates during the growing season in the main production areas ofeach crop and the average yields ofeach from 1997 to 2001. The figures were then averaged by country and globally to come up with a single water-footprint figure — per liter of ethanol or biodiesel — for each crop.

"You see a big difference depending on the country where the biomass is pro­duced, different climates, different agricultural practices, the crop being used, whether it is a starch or sugar crop used for bioethanol, an oil crop for biodiesel, or a crop that is burned for electricity generation,” Hoekstra says.

My comment is that although this is a wonderful academic study, I estimate that 75% of all Jatropha plantations are rain fed and not artificially irrigated, so I think more realistic to make a study of global Jatropha yields based on rain-fed plantations.

The team calculated that Jatropha requires an average of 20 000 liters of water for every liter of biodiesel produced in India, Indonesia, Nicaragua, Brazil, and Guatemala — the only countries for which Jatropha production figures were avail­able. For all the other crops, the researchers used much more comprehensive — and thus truly global — data from the UN FAO. Soybeans and rapeseed, the two other biodiesel crops considered in the study, were next highest in terms of water consumption, each requiring roughly 14 000 liters of water per liter of fuel.

My comment is that I think that soybeans and rapeseed should never be used to produce biodiesel. These species grow on agricultural land, which should be reserved for producing food for you, our animals and me. China, the world’s

biggest producer of rapeseed along the Yangtze River, has even forbidden the use rapeseed and soybeans as a biofuel. China is miles ahead in biofuel legislation, compared to the United States or Europe.

Other experts say that Jatropha and other biodiesel crops will likely be pushed out by much higher yields of cellulosic ethanol and algae in developed countries in the coming years.

My arguments are:

1. Capital investment in Jatropha is much less than for ethanol and algae, and especially the highly technical processes of cellulosic fuels made out of wood chips.

2. I suppose we will see a large commercial algae production around 2020 produced at competitive prices, but not before. ExxonMobil and Shell are multi­million dollar investors in algae.

3. The first big Jatropha harvest will take place in 2014, so I do not think that Jatropha "will be pushed out;” on the contrary, it is just starting!

4. Research will double the seed yields per acre or hectare in the coming years. The open issue is how to manage large plantations year in year out.

Henk Joos, one of the best Jatropha scientists in Europe, contends that the EU mandates still call for large quantities of biodiesel and says that newer, higher — yield strains of Jatropha could solve many of the plant’s water-use issues. Joos is cross-breeding different strains of Jatropha to increase seed production and to maximize the seeds’ oil content, and he is developing processes that allow the remaining seed biomass to be used for animal feed.

All in all, it is essential to differentiate between rain-fed Jatropha cultivation under highly water-stressed conditions and Jatropha cultivation with irrigation or under rainfall conditions that are sufficient to grow other crops.

3.6

To use oil from plants might be still unimportant nowadays. But in the future such products may become as important as petroleum.

Rudolf Diesel — inventor of the Diesel engine, 1912.

5.1

Intercropping and Double Cropping

Intercropping is the practice of growing two or more crops in close proximity. The most common goal of intercropping is to produce a greater yield on a given piece of land by making use of resources that would otherwise not be utilized by a single crop. Careful planning is required, taking into account the soil, climate, crops, and varieties. It is particularly important not to have crops competing with each other for physical space, nutrients, water, or sunlight. Examples of inter­cropping strategies are planting a deep-rooted crop with a shallow-rooted crop, planting a tall crop with a shorter crop that requires partial shade, or planting a fast-growing crop with a slow-growing crop.

When crops are carefully selected, other agronomic benefits are also achieved. Lodging-prone plants (i. e., those that are prone to tip over in wind or heavy rain) may be given structural support by their companion crop. Delicate or light-sensitive plants may be given shade or protection, or otherwise wasted space can be utilized. An example is the tropical multitier system where coconut occupies the upper tier, banana the middle tier, and pineapple, ginger, or leguminous fodder, medicinal or aromatic plants occupy the lowest tier.

Intercropping of compatible plants also encourages biodiversity and fertility of the soil, by providing a habitat for a variety of insects and soil organisms that would not be present in a single-crop environment. This biodiversity can in turn help to limit outbreaks of crop pests by increasing the diversity or abundance of natural ene­mies, such as spiders or parasitic wasps. Increasing the complexity of the crop environment through intercropping also limits the places where pests can find optimal foraging or reproductive conditions.

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.

The degree of spatial and temporal overlap in the two crops can vary somewhat, but both requirements must be met for a cropping system to be an intercrop. Numerous types of intercropping, all of which vary the temporal and spatial mixture to some degree, have been identified.

Some of the more significant types include:

• Mixed intercropping, as the name implies, is the most basic form in which the component crops are totally mixed in the available space. I have not seen this very often.

• Row cropping involves the component crops arranged in alternate rows. This may also be called alley cropping. A variation of row cropping is strip cropping, where multiple rows, or a strip, of one crop are alternated with multiple rows of another crop. In Hainan, China, Jatropha is intercropped with peanuts. I have seen the same in West Timor. In Ethiopia, Jatropha is intercropped with tomatoes, coffee, millet, sesame, and so on.

• Intercropping also uses the practice of sowing a fast-growing crop with a slow — growing crop, so that the fast-growing crop is harvested before the slow — growing crop starts to mature. This obviously involves some temporal separa­tion of the two crops.

• Further temporal separation is found in relay cropping, where the second crop is sown during the growth, often near the onset of reproductive development or fruiting, of the first crop, so that the first crop is harvested to make room for the full development of the second.

• Another technique is double cropping or alternate cropping. Biofuel grains like Crambe and Camelina are sown after a wheat or soybean crop on agricultural land, and can be harvested after 4 months. Then farmers sow in wheat or soybeans again on the same piece of land, and harvest these grains before the biofuel cycle starts again.

Investors in energy plantations should follow the “Food First, Fuel Later” prin­ciple, which means that food production must always be given first priority. When cultivating crops like non-edible Jatropha, one should simultaneously invest in food production to assure that local farmers and local communities are positively affected by our presence in the area.

As an example, Biofuel Africa, a Ghanaian corporation wholly owned by Nor­way-based Solar Harvest (www. biofuel. no), claims to have increased the acreage of land available for food production in Northern Ghana by 880%. In 2008, 55 acres of the company’s land was planted with food crops grown by 25 local farmers. Tests showed that repeated growing of food crops had depleted this soil of much of its nutritional content. Biofuel Africa transferred the depleted soil over to Jatropha production, offering the farmers instead the chance to relocate to land leased by Biofuel Africa that had not been previously farmed. Biofuel Africa then cleared and ploughed the land for the farmers, and the farmers themselves planted local staples such as cassava, yam, corn, rice, beans, and peanuts. Within a year, this had been increased from 55 to 540 acres, all of which was leased cleared and ploughed by Biofuel Africa.

Many non-governmental organizations (NGOs) like Friends of the Earth are engaged in the “fuel-or-food” debate and criticize Jatropha. They state that Jatropha is planted on agricultural land and pushes food crops out. With double cropping

and intercropping techniques this “fuel-or-food” debate becomes invalid. Double

cropping even fertilizes the soil!

Advantages of Jatropha intercropping include:

• Jatropha is a slow-growing crop and many Jatropha entrepreneurs or farmers do not have the financial means to wait 5 years before the big crop of Jatropha seeds comes in and provides a return on the investment. A fast-growing crop planted between Jatropha can help to raise extra income.

• Monocropping deteriorates the fertility of the soil. With intercropping, more agricultural land is created and more fertile land can be used for all kinds of agricultural produce.

• The farmers are happy when they learn this technique. They can feed their families better with a bigger variety of food.

5.2

Man is the only animal that uses external energy.

Colin Campbell — "Peak Oil” master mind.

9.1

Carbon is the Enemy

Some people argue that carbon is as big an enemy as World War I and World War II put together, and you could throw in a possible World War III as well.

Carbon credits are a key component of national and international emissions trading schemes (ETSs) that have been implemented to mitigate global warming. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price, and can be used to finance carbon reduction schemes between trading partners around the world. There are many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. These carbon offsetters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects. The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project. This is reflected in their price; voluntary stock typically has less value than the stock sold through the rigorously validated Clean Development Mechanism (CDM).

The Kyoto Protocol of 1997 called for 38 industrialized countries to reduce their greenhouse gas emissions between 2008 and 2012 to levels that 5.2% lower than those of 1990. Under the Kyoto Protocol, mechanisms for trading carbon emission reductions were created including the CDMs for developing countries. CDMs and voluntary credits (non-Kyoto credits) allow a developed country to receive credits towards emissions reduction targets by funding a greenhouse gas reduction project activity in a developing country. Carbon offsets are calculated by

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.

the amount of carbon emissions that would have been emitted had petroleum fuel been burned instead of an alternative biofuel. The approval of such carbon offsets in relation to replacing petroleum jet fuel will require additional meth­odologies under the UN Framework Convention on Climate Change (FCCC; www. unfccc. int) rules.

The global carbon markets have grown to over $70 billion per year. Approxi­mately three-quarters of the market volume is accounted for by the EU ETS (ec. europa. eu/clima/policies/ets/index_en. htm) — the world’s largest cap-and-trade system for greenhouse gas emissions. The volume of the EU ETS is expected to grow substantially as the system is expanded to include civil aviation and other indus­tries that are currently excluded; moreover, the European Union has committed to reduce its emissions by 20-30% between 2012 and 2020, so demand for European Emission Allowances (EUAs) is expected to rise, with prices projected to increase sharply over coming years.

In light of the scientific and political consensus around the need to drastically reduce man-made emissions of greenhouse gases, cap-and-trade systems are expected to proliferate in developed countries and make emission reduction cer­tificates by far the most widely traded commodity by volume. Many of these ETSs will cover the aviation industry, meaning that airlines will either need to reduce their greenhouse gas emissions through the use of biofuels or hold emission allowances under the respective ETS.

Under the CDM, developers of projects that reduce greenhouse gas emissions in developing countries can apply to the UN FCCC for corresponding numbers of Certified Emission Reductions (CERs). These CERs can be bought by companies in Europe (and future ETSs) to meet their compliance needs. Finally, governments are also key actors in the carbon markets since they are ultimately responsible for a country’s greenhouse gas emissions. They delegate a large share of this respon­sibility to the private sector through ETSs, but retain responsibility for the residual emissions of economic sectors that are outside an ETS: households and govern­ment installations and services, including the military. To meet their international treaty obligations, governments can reduce emissions and purchase CERs or EUAs from other countries that have more than fulfilled their obligations (these emission allowances are referred to as Assigned Amount Units (AAUs)). The United Nations predicts that by 2012, China will account for 40% of all carbon credits issued under this scheme.

From 1 January 2012 onwards each flight to and from the European Union has been required to be offset through the corresponding amount of EUAs or CERs.

9.2

Sugarcane is a very useful plant and is grown in more than 100 countries. It has the potential to reduce greenhouse gas emissions, diversify energy supplies, increase independency from oil, and create jobs.

13.5 Sugar Production

The territory of Brazil is so vast that the “food-or-fuel” debate (energy plants replacing food plants on agricultural land) is de facto not applicable in Brazil because:

1. Only 2.8% of the country’s arable land is planted with sugarcane. Even this tiny portion of the total agricultural surface of Brazil covers about 9.5 million hectares.

2. Out of these 9.5 million hectares, about 4.6 million hectares of sugarcane are destined for ethanol production. This biofuel production represents only 1.4% of the total arable land.

3. The area cultivated for sugarcane and used for ethanol is less than 25% of Brazil’s corn acreage, 12.5% of soybean fields, and 2.7% of the land used for cattle ranching.

4. While cane production has increased steadily in recent years, food production in Brazil has grown dramatically. The 2009 harvest for grain and oilseed reached 149 million tonnes, approximately twice that of 10 years ago. Brazil is widely recognized for its diversified and highly efficient agricultural sector — it is the world’s leading exporter of beef, coffee, orange juice, poultry, ethanol, and sugar, just to name a few of the top commodities.

5. 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, displace other crops, or destroy the Amazon region.

I hope these arguments convince you that sugarcanes are not crowding out grains or cattle!

Brazil is the world’s largest sugarcane producer, responsible for 35% of global production. Close to 90% of Brazil’s sugarcane crop is located in the south-central Region, where the annual harvest takes place from April to December, coinciding with the dry season. Only 0.2% of the sugarcane fields are in the Amazon region.

13.5

Sugar Production

At present the juice that results from the cane crush is used to produce about 50% sugar and 50% ethanol. Most of Brazil’s 430 active mills can produce both. Exactly how much of each product is made varies according to market conditions and

technical aspects of the mill’s design. Brazil exports about 70% of the total sugar production to over 100 countries.

13.6

14.3.1 Ghana

An estimated 18 million tonnes of woodfuel is produced every year in Ghana from natural forests while the climatic and soil conditions are suitable for large-scale cultivation agriforestry. In addition to the woody biomass potential of Ghana, the country generates huge volumes of crop and animal residue that could be converted into pellets or electrical and heat energy. Apart from traditional uses of biomass, the modern bioenergy potential of Ghana remains largely unutilized.

14.3.2 Ethiopia

Ethiopia is a country of 86 million people and I think that Addis Ababa will become the capital of Africa. Here resides the African Union, comparable to the European Union. Addis Ababa also has the largest public market in Africa called Mercator. This is like a city within a city. Ethiopians are largely employed in agriculture (41% of the gross domestic product). Ethiopia is one of the poorest countries in Africa, but the economy is growing rapidly at 11% per year.

The energy balance in Ethiopia is dominated by biomass energy. Eighty-eight percent of the country’s energy supply comes from biomass fuels (wood, charcoal, and agricultural residues). The government stimulates the cultivation of sugarcane

plantations and recently ethanol has started to be used as a gasoline in Addis Ababa. The main use of biomass energy is for cooking in residential and com­mercial establishments. Demand for biomass fuels is growing as rapidly as food production.

Fossil fuels provide only 9.5% of the total final energy supply, and are consumed in the transport, industry, and residential sectors. Ethiopia does not produce fossil fuels and imports all its requirements through a government agency.

All in all, Ethiopia is ideal for cultivating Jatropha or sugarcane. However, land ownership is not possible and this hampers large investments in biofuels. Ethiopia has a diverse range of renewable resources and a great potential market in its large population with growing incomes. Despite a rise in the adoption of renewable energies, only a small fraction of the potential is realized.

14.3.3

Nigeria

Like Ghana, Nigeria has large natural palm forests. Next to producing palm oil, these two countries have started to export palm kernel shells to European utility buyers, who blend the shells with coal in their boilers to reduce carbon dioxide, sulfur, and nitrogen emissions. Shipping routes from West Africa to Amsterdam, Rotterdam, and Antwerp (ARA) are shorter than the Asian (ASA) routes, so the logistical costs are lower with African biomass.

Still, the long-term fundamentals of commodities, particularly of oil, are by far more compelling than the those of US equities — this especially since according to several leading historians, including Arnold Toynbee, rising commodity prices have always turned up the war cycle, as the drive to secure the supply of finite and scarce resources intensifies. This should be particularly true for China, whose economic Achilles heel is a lack of water, food, oil, and other industrial commodities. I fear, for instance, that Iran is secretly developing nuclear arms and when this escalates into a new war in the Middle East, oil prices will rise substantially.

Figure 1.10 illustrates that most crude oil we consume today comes from poli­tically rather unstable countries.

1.13

Jatropha is seen by many to be the perfect biodiesel crop. It can be grown in very poor soils, it improves the topsoil, it is drought and pest resilient, and it has seeds with up to 40% oil content.

Here is a summary about Jatropha relating to its growth as an oil product:

• The quality of the biodiesel from Jatropha is superior to corn or soybean oil at much lower costs. Its quality is also better because it does not require extensive refining for use in cooking stoves, only a simple “transesterification” will improve the purity for use as a fuel for cars and diesel engines for ships and backup power in buildings.

• Jatropha grows well on low-fertility soils; however, increased yields can be obtained using Jatropha seedcake as an organic fertilizer.

• Jatropha should be intercropped with many cash crops, such as coffee, sugar, fruits, and vegetables.

• Jatropha needs at least 600 mm of rain annually to thrive; however, it can survive 3 years of drought by dropping its leaves. As mentioned previously, less water means lower yields.

• Jatropha is excellent at preventing soil erosion and the leaves it drops act as a wonderful soil-enriching mulch. This is like placing a protective cover over the soil to retain moisture, reduce erosion, provide nutrients, and suppress weed growing.

• Jatropha prefers alkaline soils.

• Jatropha seedlings yield seeds in the first year when planted in a plantation.

• Jatropha trees are productive for up to 40-50 years.

• Between 1600 and 2200 trees can be planted per hectare (approximately 1000 per acre).

• One hectare should yield around 6 tonnes of seeds per year, out of which 2.0-2.5 tonnes of crude Jatropha oil can be pressed.

• Press cake (seedcake) is left after the oil is pressed from the seeds. This can be composted and used as a high-grade nitrogen-rich organic fertilizer. This is commercially the most interesting part of growing Jatropha, not the oil. The profit margins are great: with an investment of around $30 per tonne, seedcake at present can be sold for around $150-170 a tonne in China and demand is high. Organic fertilizers based on Jatropha are, for instance, used in the tobacco plantations in Yunnan. The remaining oil from the seedcake can be used to make skin-friendly soap.

3.1.25

The benefits of algae are shown in Table 4.1.

4.2.4

Navy Orders

Algae’s big moment has come! Solazyme Inc. (www. solazyme. com) has delivered to the Navy 20’000 gallons of renewable algae derived F-76 Naval distillate fuel for use in Navy ships. In the overall fuel market, 20 000 gallons is not a large amount. The United States consumes 20 million barrels of oil a day and a barrel contains 42 gallons. However, 20 000 gallons in the algae world is very, very substantial. Also Solazyme has supplied 1’500 gallons of 100% algae derived jet fuel for testing and certification by the U. S. Navy. In addition the U. S. Navy wants to buy an additional 150’000 gallons of distillate fuel from Solazyme. The overall conclusion is that the Navy is happy with the performance of the fuel. The new contract with the U. S. Department of Defense (DoD) is for a research and development project in order to replace 50% of the Navy’s heavy diesel fuel by 2020. Algae are not only used as fuels but also in skin care products. Solazyme has developed a new generation of innovative skin care products based on the characteristics of algae. The brand is called Algenist and is distributed in the QVC and Sephora stores.

Expect to see more deals like this in the future as algae companies move toward commercialization. Other names to keep an eye out for include Synthetic

Table 4.1 Benefits of algae

Microalgae, as distinct from seaweed or macroalgae, can potentially produce 100 times more oil per acre than soybeans — or any other terrestrial oil-producing crop.

Algae can be cultivated in large open ponds or in closed photobioreactors located on non-arable land in a variety of climates (including deserts).

Many species of algae thrive in seawater, water from saline aquifers, or even wastewater from treatment plants.

During photosynthesis, algae use solar energy to fix carbon dioxide into biomass, so the water used to cultivate algae must be enriched with carbon dioxide. This requirement offers an opportunity to make productive use of the carbon dioxide from power plants, biofuel facilities, and other sources.

The lipids produced by algae can be used to produce a range of biofuels and the remaining biomass residue has a variety of useful applications: combust to generate heat, use in anaerobic digesters to produce methane, use as a fermentation feedstock in the production of ethanol, or use in value-added byproducts, such as animal feed. It is also being used in breast cancer treatment.

Genomics, Sapphire Energy, OriginOil, Aurora Biofuels, and Solix. Solazyme, by the way, is one of the iconoclasts of the industry. Rather than grow algae in big ponds, it cooks it in big vats with sugar (see Chapter 20). This adds raw material costs, but Solazyme does not have to separate its algae from water to press it for oil — a key consideration.

What are algae’s obstacles? There are over 100 000 kinds of algae. They are not yet domesticated and researchers still have great difficulty obtaining stable algae cultivation. Algae are infected by weed algae, grazers, ameba, fungi, bacteria, and other viruses. They are a constant, unpredictable, and variable threat. This is the central problem of algae mass cultivation.

Algae is not used for food and genetically modified algae has the highest oil content. All in all, the green slime has a great future!

4.3