Global Development and Trends

2006 saw the record of US$ 85 for a barrel of oil broken. Of major concern is that this is not just another 1970s/80s oil crisis and that the world has moved to a point where oil discoveries are smaller and failing to match both traditional demand and the energy demands of large growing economies such as China and India.

For many governments around the world this has been a clear signal to accelerate the development of alternative fuels such as ethanol, bio fuel, LPG, and CNG that will be needed to bridge the transition to new future fuel technologies over the next 30 years.

Furthermore, there are many other factors, which are driving greater interest in renewable fuel sources. These include future energy security, reductions in vehicle exhaust emissions that create air pollution and pose a direct threat to human health, significant greenhouse benefits compared to petroleum fuels and new economic and jobs growth in regional and rural communities.

Motivational factors

1. Renewable energy:

It appears that the strongest motive for most of the bio fuel producers is that it is as a renewable form of energy, especially when it has become obvious that fossil resources are finite and supply security of mineral oils is an increasing risk.

2. Environmental benefits:

Obviously all the environmental benefits (less greenhouse effect, less local air pollution, less contamination for water and soil, less health risks) are seen as convincing motivational factors with some variation by country.

3. Utilisation of agricultural surpluses:

Increased production of agricultural crops for non-food purposes has offered the opportunity to utilise land, which otherwise would be set-aside as an unexploited resource. It is no surprise that this argument it seen as a strong motive in favour of bio fuel.

4. Creation of a pioneer image:

Developing a new challenging idea and the related positive image can be a strong driving force.

5. Scientific interest

For this new research & development field in renewable energy.

6. Political reasons

7. State incentives

Worldwide Activities

In these years bio fuel has steadily emerged from a trial production in back-yard type pilot plants to full industrial type production and marketing with wide and increasing acceptance by the Diesel vehicle industry, the fuel trade, and the end-user in a wide variety of market segments. In 21 out of the researched 28 countries bio fuel was produced and tested within the period of the last 6 years. Those activities have led or most probably will lead to commercial projects in countries with different structures e.g. Austria, Czechoslovakia, France, Germany, Italy, Malaysia, Nicaragua, Sweden, USA and India.

Reduced import dependency

Following is a summary of steps being taken by a growing number of governments to promote the development of sustainable renewable fuels worldwide.

United States

·      Hawaii has mandated that at least 85% of petrol sold in the state must contain 10% ethanol from April 2006.

·                Currently the US has 81 operating ethanol plants, with 11 new plants currently under construction.

·      The rapid industry growth is being driven by major oil company demand for ethanol as a replacement for methyl ether (MTBE) as an oxygenate in reformulated fuel in states such as California, which alone has over 25 million cars and light vehicles.

·      Both President Bush, and his Democrat opponent, Sen. John Kerry, announced strong support for renewable fuels industry growth in America in their 2004 Presidential election campaigns. The President stated during his election campaign, "I believe in ethanol and I believe in bio diesel." Sen. Kerry planned to create a government/agriculture/industry ‘Clean Fuels Partnership’ to meet 20% of U.S. motor fuel demand from domestically produced renewable transport fuels by 2020.

·      The Ford Motor Company have announced research and development to build and design a new engine for the exclusive use of bio diesel in July 2006.

Brazil

·      The success of the government/industry Brazilian road show delegation visit to Queensland has opened up valuable information channels with the ethanol industry in Brazil. This has led to the announcement of a technical feasibility study between a cane-growing group QLD and the major Brazilian equipment company, Dedini, on introducing the Brazilian ethanol model into the QLD sugar industry.

·      Record high oil prices and Asian demand (China, Japan, and India) for renewable fuels have witnessed record demand for Brazilian ethanol exports. With Brazil producing ethanol at US$20 to US$30 per barrel the demand for ethanol as a replacement for oil can only grow.

·      In October 2004 the Brazilian parliament mandated a 2% bio fuel blend with diesel fuel, with plans to raise the bio fuel content to 5% in 5 years.

Canada

·      The Canadian bio fuels industry is poised for significant growth as Ontario moves to join Saskatchewan and Manitoba in implementing a 10% renewable fuels mandate. Other provinces such as British Columbia are supporting ethanol and bio fuel by making them exempt from fuel excise taxes.

·      Canada aims to have a 10% ethanol blend in 35% of all petrol sold by 2010.

·      The worlds first commercially produced ultra low carbon ethanol fuel from wheat straw, is being used in a 10,000-km coast-to-coast clean vehicle promotional tour supported by GM Canada and Chevrolet. The tour will end in October.

Japan

·      The current oil price crisis has intensified Japanese interest in introducing fuel ethanol into their transport fleet. The tempo of negotiations with Brazil has increased, with a visit by Japan’s Prime Minister to a major ethanol plant in Brazil.

·      Initial reluctance by oil companies in Japan to take up ethanol was reflected in a Nippon Oil statement announcing that six refineries were expected to commence blending, storage, distribution and sales trials of ethanol this year. A prolonged international oil price crisis is expected to bring this timetable forward.

European Union

The EU has approved a Directive that stipulates that the energy-based share of bio fuels should be 2% by the end of 2005, increasing 0.75% per year until it reaches 5.75% by the end of 2010. Bio fuel production is experiencing higher growth in Europe than ethanol.

·      The EU Commission is introducing UK Treasury measure to reduce or exempt rates of fuel excise on ethanol and bio fuel used for road transport between 2005 and 2010.

·                Germany has commenced construction of a 260 million-litre ethanol plant that is due to come on line later this year.

·      Spain, Germany and Sweden offer generous incentives to promote bio fuels use, and Germany alone will produce 1 billion litres of bio fuel in 2004.

·                Sweden has mandated a 5% renewable fuels target.

China

·      In early 2003 China eclipsed Japan as the largest user of oil in Asia, relegating Japan to the position of fourth largest user of oil after the United States, Europe and China. The International Energy Agency anticipates that the surge in Chinese demand for oil will continue into the future.

·                Although China is the third largest ethanol producer in the world (over 3 BL per year), it is considered inevitable that Chinese demand for fuel ethanol for transport use will also drive higher import levels in the future, along with higher investment in energy agriculture capacity in producer countries.

·      The Chinese Government is supporting the use of ethanol in the transport sector in 8 provinces in the north of China.

Thailand

·      The Thai Government recently approved the construction of 8 ethanol plants and is currently considering the approval of a further 12 plants using Sugarcane and Cassava.

·      In Thailand two national oil companies and Royal Dutch Shell are expected to commence sales of E10 at service stations in the near future.

·      The Petroleum Authority of Thailand has announced that it will follow the lead of the U.S. in phasing out MTBE in petrol during 2004-2006.

India

1        In India, a current project aspires to produce between 100,000 and 120,000 tonnes of Jatropha oils in a year.

South Korea

·      As a major producer of MTBE fuel in Asia, South Korea is reluctant to ban MTBE, and is continuing scientific research to assist it in determining the future of MTBE production in Korea.

Columbia

·                Columbia has announced investment of US$200 million to build eight ethanol plants in the country as part of a national program to introduce a 10% ethanol blend in motor fuels.

Mexico

·      Mexico has initiated negotiations with Brazil on the introduction of ethanol to deal with the severe air pollution problems in its major cities.

Czech Republic

·      The Czech Republic has announced reductions in fuel excise levied on bio fuel blend fuel to promote the use of environmentally friendly renewable fuels.

United Kingdom

·            Scotland’s first bio fuel plant (50 million litres per year) is expected to commence commercial production at Newarthill in early 2006.

·    British Petroleum (BP) has announced on 20^th July 2006 that they have set up a new £400 million research and development division into the use of bio fuel world wide.

South Africa

·      The Treasury in South Africa has proposed tax incentives for bio fuels production to attract investment, and expand the renewable energy/fuels sector.

Australia

·      The Federal Election campaign saw the Labour Party move back to a bipartisan policy on ethanol and bio fuel, with the claim that their policy was identical to that of the Government.

·      Against the background of the current oil crisis the industry will be seeking to encourage the Government to extend the bio fuels production target beyond the modest 350 million litres originally set under the $50 million grants scheme promised in 2001.

·      No ethanol or bio fuel project in Round One was successful in securing oil company off-take agreements. Current indications are that none of the projects under Round Two have secured contracts. The challenge for the Government is whether the major oil companies will again be permitted exercises a de facto veto over projects in Round Two. If this is the case it will be further evidence that Australian oil company policy towards renewable fuels remains completely at odds with that of their parent companies in the U.S., Europe and elsewhere.

World Bank

The Chief Scientist of the World Bank has stated the global challenge is to produce energy from fossil fuels more efficiently, without emitting CO2 in the air, and also produce energy from renewable fuel technologies.