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Biofuels and wind - July 15

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Indonesia to spend a massive US$ 22 billion by 2010 to promote biofuels

BioPact
OPEC member Indonesia, a future Biofuels Superpower, has given more details [*Bahasa Indonesia] about its previously announced bioenergy crash program (earlier post). The country plans to invest a massive Rupee 200 trillion (€17.3 bn / US$22 bn) over the next five years to promote the use of alternative fuels using crops such as palm oil, cassava, jatropha and sugar cane for the production of biodiesel and ethanol Energy Minister Purnomo Yusgiantoro said.

About $6 billion will be spent securing 6 million hectares (14.8 million acres) of land, in an as-yet-unspecified location, and the rest will fund factories, roads and other supporting services, he said. Plant-based fuels can be mixed with gasoline, diesel and kerosene, now subsidized by the government.

Biofuel "can replace fuel in the transportation sector," Purnomo said today at an event in Jakarta to promote biofuel. It also helps communities raise their level of fuel self-sufficiency and creates a large number of jobs.

Indonesia, Southeast Asia's biggest oil producer and user, still imports a third of its fossil-fuel requirements, and the government wants to use more vegetable oils to reduce overseas purchases of petroleum and refined products. Higher crude oil prices, which have tripled since 2002, are spurring greater government and investor interest in biofuels worldwide.
(13 July 2006)
"The BioPact unites EU citizens and African citizens who work towards a common bioenergy future, in which the EU couples part of its green energy policies to its humanitarian and development policies in Africa. We also monitor biofuels and bioenergy news coming from the developing world in general."


Supermarkets and Service Stations Now Competing for Grain

Lester R. Brown, Earth Policy Institute
Cars, not people, will claim most of the increase in world grain consumption this year. The U.S. Department of Agriculture projects that world grain use will grow by 20 million tons in 2006. Of this, 14 million tons will be used to produce fuel for cars in the United States, leaving only 6 million tons to satisfy the world’s growing food needs.

In agricultural terms, the world appetite for automotive fuel is insatiable. The grain required to fill a 25-gallon SUV gas tank with ethanol will feed one person for a year. The grain to fill the tank every two weeks over a year will feed 26 people.

Investors are jumping on the highly profitable biofuel-bandwagon so fast that hardly a day goes by without another ethanol distillery or biodiesel refinery being announced somewhere in the world.

...The U.S. investment in biofuel production in response to runaway oil prices is spiraling out of control, threatening to draw grain away from the production of beef, pork, poultry, milk, and eggs. And, most seriously, the vast number of distilleries in operation, under construction, and in the planning stages threatens to reduce grain available for direct human consumption. Simply put, the stage is being set for a head-on collision between the world’s 800 million affluent automobile owners and food consumers. Given the insatiable appetite of cars for fuel, higher grain prices appear inevitable. The only question is when food prices will rise and by how much. Indeed, in recent months, wheat and corn prices have risen by one fifth.

For the 2 billion poorest people in the world, many of whom spend half or more of their income on food, rising grain prices can quickly become life threatening. The broader risk is that rising food prices could spread hunger and generate political instability in low-income countries that import grain, such as Indonesia, Egypt, Nigeria, and Mexico. This instability could in turn disrupt global economic progress. If ethanol distillery demand for grain continues its explosive growth, driving grain prices to dangerous highs, the U.S. government may have to intervene in the unfolding global conflict over food between affluent motorists and low-income consumers.
(13 July 2006)


Challenges emerge for wind power (costs up 70%)

Chris Mulick, Tri-City Herald (Washington state)
A preliminary report shows the cost of building and operating Northwest wind farms has shot up by as much as 70 percent in two years. A series of factors -- including increasing demand for wind farms, rising costs for materials and the weakening U.S. dollar -- have driven up construction prices.

At the same time, Northwest dams don't have enough remaining flexibility to supplement and smooth the up and down generation patterns of new wind farms.

But neither issue was discussed Tuesday before the Northwest Power and Conservation Council is likely to slow wind farm construction. Costs for building other kinds of power plants also are climbing.

"It's not just wind. It's across the board," said Jeff King, a senior resource analyst for the council. Instead, the discussion was intended to raise the profile of new issues emerging for a wind power industry that is gaining momentum.
(12 July 2006)
More evidence that as the price of oil rises, the cost of developing non-petroleum energy sources will also rise. -BA

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