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Once a Dream Fuel, Palm Oil May Be an Eco-Nightmare

Elisabeth Rosenthal, NY Times
Just a few years ago, politicians and environmental groups in the Netherlands were thrilled by the early and rapid adoption of “sustainable energy,” achieved in part by coaxing electrical plants to use biofuel — in particular, palm oil from Southeast Asia.

A palm oil estate on the outskirts of Kuala Lumpur, Malaysia. Exports hit a record $9 billion last year because of strong European demand.

Spurred by government subsidies, energy companies became so enthusiastic that they designed generators that ran exclusively on the oil, which in theory would be cleaner than fossil fuels like coal because it is derived from plants.

But last year, when scientists studied practices at palm plantations in Indonesia and Malaysia, this green fairy tale began to look more like an environmental nightmare.

Rising demand for palm oil in Europe brought about the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertilizer there.

Worse still, the scientists said, space for the expanding palm plantations was often created by draining and burning peatland, which sent huge amounts of carbon emissions into the atmosphere.

Considering these emissions, Indonesia had quickly become the world’s third-leading producer of carbon emissions that scientists believe are responsible for global warming, ranked after the United States and China, according to a study released in December by researchers from Wetlands International and Delft Hydraulics, both in the Netherlands.

“It was shocking and totally smashed all the good reasons we initially went into palm oil,” said Alex Kaat, a spokesman for Wetlands, a conservation group.
(25 Jan 2007)

Palm Oil — The Southeast Asia Report

Dave Cohen, The Oil Drum
In an effort to broaden our coverage at The Oil Drum, this Southeast Asia report focuses on the tragic consequences of cultivating palm oil ( to produce biodiesel fuel.

It is a sad story in which the cure is sometimes worse than the disease.
(30 Jan 2007)

Indonesia studies oil palm restriction plan

TEMPO Interactive
The government has asked that the plan to increase levies or export restrictions on crude palm oil (CPO) be observed comprehensively.

Up until today, the Department of Finance is still examining the plan. According to Hatanto Reksodiputro, Secretary General of the Department of Trade, CPO prices on the international market are now high. As a result, many manufacturers have sold CPO abroad.

Exports will be reduced by increasing levies or restrictions.

“Do not look at the increase, but at the attention that the government is paying to biofuel development,” he said yesterday (01/30). Agriculture Minister Anton Apriyantono has said that oil palm and palm oil production management must not use methods that involve increasing levies on exports.

According to him, other policies can still be issued to save plantations and processing industries. “So, export levies are not essential,” said Anton.
Some oil palm producers said they were worried if the government restricted CPO exports by setting quotas or increasing levies. Should the plan be carried out, it would decrease exports and farmers’ oil palm prices will drop. Today, the CPO export levy is 1.5 percent of the export benchmark price.
(31 Jan 2007)

Zócalo protest calls attention to high prices

KA Garrett, El Universal
After two quiet months, demonstrators filled the capital´s central square Wednesday, protesting high food prices and clearly showing President Calderón his honeymoon is over

After two quiet months, demonstrators filled the capital´s central square Wednesday, protesting high food prices and clearly showing President Calderón his honeymoon is over.
Rally organizers, primarily labor and campesino groups, issued a statement calling for more government action in balancing wages and prices, as well as more involvement by the social sector in that action.

“Those who assure us they won the election have no right to monopolize public decisions,” said Verónica Velasco, the television journalist chosen to read at the rally the “Zócalo Declaration” signed by the participating organizations. “What we´re demanding today is sovereignty, both nutritional and energy, and the defense of salaries and jobs.”
Wednesday´s march and rally grew out of widespread public anger at the suddenly skyrocketing prices of tortillas, the nation´s staple food. The Calderón administration took belated action by forging an agreement among suppliers and manufacturers to hold the line at 8.50 pesos per kilo, with uneven success. ..

But López Obrador´s famed drawing power was evident as tens of thousands of his supporters marched down Madero Avenue even as other protesters were leaving in the opposite direction on parallel streets.

“It´s obvious that we must insist on changing the current economic policy,” López Obrador told the crowd. “Not just for ideological reasons but because it simply hasn´t worked.”
(1 Feb 2007)
The link with corn-ethanol is not made above, but Melbourne’s Herald Sun does: Thousands march over tortilla crisis
Related story in the NY Times.

Food vs. Fuel

Business Week
As energy demands devour crops once meant for sustenance, the economics of agriculture are being rewritten
…Corn is caught in a tug-of-war between ethanol plants and food, one of the first signs of a coming agricultural transformation and a global economic shift. Ever since our ancestors in the Fertile Crescent first figured out how to grow grains, crops have been used mainly to feed people and livestock. But now that’s changing in response to the high price of oil, the cost in lives and dollars of ensuring a supply of petroleum imports, and limits on climate-warming emissions of fossil fuels. Farms are energy’s great green hope. “Economics, national security, and greenhouse gases have created a perfect storm of interest,” says John Pierce, vice-president for bio-based technology at DuPont, (DD ) which is making fuel and chemicals from plants.

…The consequences, while still uncertain, are impossible to ignore

…Whether this is good or bad is a matter of intense debate. At one extreme is Lester Brown, president of the Earth Policy Institute. He warns of a coming “epic competition between 800 million people with automobiles and the 2 billion poorest people,” and predicts that shortages and higher food prices will lead to starvation and urban riots. “I don’t think the world is ready for this,” he says. Dow Chemical Co. (DOW ), which is turning soybeans into foam for furniture and car seats, worries about rising demand. “There’s only so much biologically based stuff around,” says William F. Banholzer, corporate vice-president and chief technology officer. … In addition, biofuels are expected to bring a rare permanent change in farm economics.

…Is all this really so bad? Pessimists, in fact, are a minority in debates about food vs. fuel. Lapp notes that food is now at its cheapest level, historically. “It’ll be easier to pass on the food increases because we’re spending a smaller portion of our disposable income on food than in the 1970s,” he says. And some experts even argue that a boost in food prices could be beneficial to Americans’ health.
(5 Feb 2007)
Contributor Michael Winks writes: “This provides balance, generally foreign to stories on this topic”

I agree with Michael that the reporting in the article is better than usual. However, higher corn prices affects people around the world, not just Americans – as witness the surge in the price of tortillas for Mexicans. -BA

Meanwhile, Imports Are Rising

Lauren Etter, Wall Street Journal
Even as the U.S. looks to ethanol as a way to wean itself off foreign petroleum supplies, imports of the biofuel are soaring.

Despite a sharp tariff levied on most ethanol shipped from abroad, importers are finding they can compete with domestic ethanol on price. Some foreign suppliers, especially Brazil, also can provide ethanol more easily in some cases because of shipping bottlenecks in some areas of the U.S.

The surge in imports has yet to cause political backlash because U.S. ethanol supplies haven’t caught up with demand. But tensions could arise this year as production at a slew of new domestic ethanol plants threatens to outstrip demand. Already, Corn Belt farmers who supply ethanol plants have taken to calling Brazil, the top foreign supplier of ethanol to the U.S., the “Saudi Arabia” of ethanol. “Why should we be trading dependency on one energy source for dependency on another?” asks Matt Hartwig, a spokesman for the Renewable Fuels Association, a trade group for the U.S. ethanol industry.
(1 Feb 2007)
The story is currently available for free viewing.

Cal to be hub for study of alternate fuel
Group headed by UC Berkeley wins $500 million grant from BP

Rick DelVecchio, Mark Martin; Chronicle
An unprecedented $500 million grant to develop new biofuels has been awarded to a consortium led by UC Berkeley, making the Cal campus the international hub of research on clean energy and the Bay Area the potential crucible of a new post-oil economy.

…The oil giant announced last June that it would stake half a billion dollars over 10 years on the search for alternatives to oil and gas and was looking for a major academic center to host the project, which it described as the first of its kind in the world.

The center will fund “radical research aimed at probing the emerging secrets of bioscience and applying them to the production of new and cleaner energy, principally fuels for road transport,” according to an announcement on the company’s Web site.

…UC Berkeley has been aggressively moving to become the world’s research-and-development center for alternative fuels. The university, working with the national lab, where many faculty members hold joint appointments, is combining its expertise in engineering and the life sciences to bring clean energy technologies to consumers in the next 10 to 20 years.

One focus is solar power, in which researchers are developing more powerful, cheaper ways to convert sunlight to electricity and fuel.

Another focus is bioengineering, in which scientists are designing new genetic operating systems that code specially bred microbes to make hydrocarbons, which could be brewed in mass quantities for transportation fuel.

Scientists predict that biofuels will become a critical part of the U.S. economy’s shift from oil.
(1 Feb 2007)