Under the umbrella of Mother Earth Investments AG you can invest in a private equity fund under Luxemburg law, which manages plantations and invests in biofuels, biomass projects, high-tech biofuel companies, and so on. You will enjoy the expertise, the research, and the contacts of Mother Earth Investments and Biomass Partners Ltd. worldwide. Roland A. Jansen is a shareholder in Mother Earth Investments AG and Biomass Partners Ltd.

Private equity investments are for sophisticated and well-capitalized investors only.

20.2.6

Biofuel Companies

My idea of a group decision is to look in the mirror.

Warren Buffett — investor.

20.2.6.1 introduction

Stocks worldwide fell substantially in 2011 and bioenergy stocks were no excep­tion. Many renewable energy stocks are now at least 50% cheaper than at the start of 2011. I think they have fallen more because of a gloom and doom mood in general then because of bad company results. Hence, you can buy these stocks today at bargain prices.

Biofuels production, as a winning investment theme, also has the benefit of many governments pushing for its use as a way to boost their farm sectors and to reduce reliance on foreign oil. In the United States, for instance, the Environ­mental Protection Agency is increasing the amount of renewables required to be blended into transportation fuel nearly 4-fold from 34 billion liters in 2008 to 136 billion liters by 2022 (www. epa. gov/cleanenergy). About 40% of the total in 2020 could come from corn-based ethanol. However, I expect that in the near future ethanol production from corn will be forbidden in the United States, just like in China. This world is on the verge of a food crisis and I think that food crops should not be used to produce energy for our cars. The exception is Brazil, where only 2.5% of all present cultivated agricultural land is used to grow sugarcane.

I project that worldwide output of bioethanol from trees, agricultural residues, and non-food plant residues could have a value of $80 billion by 2022, up from virtually nothing currently.

Among specific companies, Weyerhaeuser can benefit because the supply of biomass will be the limiting factor in this type of fuel production and the company, as a large timberland owner, will ultimately command a position of strength.

The big winners are expected to be enzyme makers, forest companies, cellulosic ethanol producers, and the agricultural sector. I expect that second-generation ethanol and biodiesel from new technologies will become the predominant renewable sources of energy for transportation by 2020.

US Congress has decreed that the country must be using 21 billion gallons of “advanced” biofuels a year by 2022. Washington is backing that goal with tax breaks, loan guar­antees, and scores of millions of dollars in grants, with more support expected in upcoming energy bills. These inducements and the vast potential market have stimulated investments of more than $3 billion and spawned a new industry.

More than 200 companies, from 12-person start-ups to oil giants, are developing next-generation biofuels using a bewildering array of technologies. Pilot and demonstration plants are operating or are under construction worldwide. Meeting the 2022 goal in the United States is unlikely. It would require not only building hundreds of fuel factories — at a cost of $500 million or more each — but also surrounding each one with thousands of acres of land planted with energy crops such as prairie grass.

These difficulties do not mean that advanced biofuels are not coming or that they will not play a crucial role in fighting climate change. However, everything will happen more slowly than many venture capitalists say.