Tag Archives: energy
Sharing The Risks/Costs Of Biomass Crops
Sep. 4, 2013 — Farmers who grow corn and soybeans can take advantage of government price support programs and crop insurance, but similar programs are not available for those who grow biomass crops such as Miscanthus. A University of Illinois study recommends a framework for contracts between growers and biorefineries to help spell out expectations for sustainability practices and designate who will assume the risks and costs associated with these new perennial energy crops. “The current biomass market operates more along the lines of a take-it-or-leave-it contract, but in order to encourage enhanced participation and promote a more sustainable, stable biomass supply, a new kind of contract needs to be created,” said Jody Endres, a U of I professor of energy and environmental law. Endres said that a good contract gives everyone more certainty. “Incomplete contracts are the hazard,” she said. “We need to develop contracts that nail down all of the details and are transparent about who’s taking on the risk and who’s paying for it. If we get these considerations into the contracts, those who finance this new biomass crop industry will have more certainty to invest.” The study identifies considerations that should be included in the framework for a biomass contract, including a control for moral hazard, risk incentive tradeoff, existing agricultural practices, and risk and management tools to make the industry more sustainable financially and environmentally. Endres said that if biorefineries receive money in the form of carbon credits for reducing pollution, incentives for farmers should be included in contracts because they are the ones who are bearing the risks associated with sustainability practices. “Suppose a sustainability contract lists that the default should be integrated pest management rather than application of traditional pesticides,” Endres said. “The farmer takes on some risk to provide a sustainable product, but the biorefinery gets carbon credit for those sustainable practices. This should be worked into the contract — that if the farmer assumes the risk of IPM as opposed to traditional pesticide options, there has to be some sort of up-front payment or incentive in the contract to account for this risk. Due to the power relationships in this industry, the onus is on the biorefinery to be the leader in developing contracts in this new landscape.” The perennial nature of biomass crops also makes developing contracts challenging. “We’re in a unique environment, and traditional agricultural contracting structures just don’t apply,” Endres said. “Crop insurance is not currently available for farmers who grow biomass crops so they take on additional risk. Likewise, landowners see high prices for traditional commodity crops and do not want to be locked into a multi-year contract with a lessee to grow a perennial biomass crop. It’s complicated,” she said. Endres said that although sustainability requirements are important, having an adequate supply of biomass is important as well. “We’re trying to envision a future in which we have a lot of biomass and one way to secure that is to recognize all of the risks and costs, especially when it comes to sustainability practices. It’s unique, and we do not yet have contracts for this aspect of the industry,” she said. A newly forming biomass standards group, in which Endres holds a leadership role, is looking at how the value of sustainability practices can be measured at the watershed, eco-shed, or air-shed level rather than on the scale of individual farms. Endres said that the working group will examine how to ensure that balance is achieved between producers and consumers of biomass, including through contracts. “I’m optimistic that it can be done,” she said. “Growers and refiners right now are concerned with the industry being financially sound. “There’s also a real need for education in both developed and underdeveloped countries about biomass contracting,” Endres said. “We’re trying to shift the paradigm from traditional agriculture to something that’s more sustainable–and that takes knowledge. If we don’t have that knowledge here in the United States and we’re trying to draft contracts in our very developed system, how is this going to be rolled out in say, Africa, or other areas where the use of production contracts are much more rare, especially in the small farm context?” The research was supported by funding from the Energy Biosciences Institute and USDA National Institute of Food and Agriculture, Hatch Project No. ILLU-470-309. Continue reading
US And Europe Growth, S Africa And Brazil Weakness
http://www.ft.com/cms/s/0/03610790-1497-11e3-a2df-00144feabdc0.html#ixzz2e0dbF9B6 By Catherine Contiguglia Diverging fortunes between emerging and advanced economies played out in economic data on Tuesday, as European and US indicators pointed to steady growth, while in South Africa the business climate deteriorated and Brazil’s industrial output declined. Africa South Africa: The overall business climate declined in August according to the SACCI Business Confidence Index, which fell to 90.5 in August compared with 90.7 in July. “The continuing lack of economic momentum, ongoing labour disruptions of the economy and the slowdown in growth in the Brics countries are important factors affecting business confidence at present,” the report said. On a year-on-year basis, improved levels of merchandise import and export volumes made notable positive contributions to business confidence, while the financial environment, inflation and the falling value of the rand had a negative impact on business confidence, the report said. Americas Brazil: Industrial output fell by a seasonally adjusted 2.0 per cent, almost cancelling out June’s 2.1 per cent expansion, the government statistics office reported. However, it maintained a 2.0 per cent growth on the year. The annualised rate remained on an upward trend started last December with a 0.6 per cent improvement in July, its highest level since November 2011. US: The purchasing managers’ index for manufacturing came in at 55.7, up from 55.4 in July, as the industrial sector held up despite sharp cuts to US public spending and a slowdown in emerging markets. The data add to evidence of resilience in the US economy that may give Fed officials confidence to start reducing the pace at which they add extra stimulus to the economy. Expectations had been for a drop in the PMI to 54. The index is based on a survey of purchasing managers by the Institute for Supply Management and a figure of 50 divides expansion in the sector from contraction. Asia-Pacific Australia: The current account deficit increased by 7 per cent, or A$610m to a total of A$9.3bn in the second quarter as the primary income deficit rose 6 per cent. Import growth outpaced exports, increasing A$1.8bn, compared with a A$1.6bn increase in exports, the Australian Bureau of Statistics reported. The net goods and services surplus fell 2 per cent to A$7.1bn in the second quarter, which is expected to detract 0.04 percentage points from the second-quarter GDP growth. The net International Investment Position liability position decreased A$31.8bn since the end of March to A$816.9bn, while the net foreign equity liability fell to A$54.8bn. “We have left our preliminary forecast for Q2 GDP unchanged at 0.6 per cent as stronger-than-assumed public spending offset slightly weaker net exports,” said Barclays economist Kieran Davies. Public demand fell 5.6 per cent in the second quarter, but only because of the government sale of port assets to the private sector – excluding these transactions, public demand rose 1.6 per cent, adding 0.3 percentage points to GDP. Retail turnover rose slightly by a seasonally adjusted 0.1 per cent in July compared with June, and by 1.9 per cent in July on the year. The rise was led by household goods, which rose 1.8 per cent, followed by food sales, which rose 0.5 per cent, which were offset by a fall of 7.9 per cent in department stores. Japan: Summer bonuses rose in July by 2.1 per cent compared with the year before, government data showed, a sign of higher business confidence. However, the rate of wage growth overall slowed down as inflation continued to pick up. The growth rate of labour cash earnings fell to 0.4 per cent in July after a 0.6 per cent growth in June, as bonuses accounted for 27 per cent of total earnings in July, compared with 40 per cent in June. “Unless we see a further acceleration in regular earnings, wage growth may . . . drop to around 0 per cent in coming months,” an eCapital report said. However, more positively, the labour market is seen to be tightening, unemployment is down and profitability of Japanese companies is improving. “However, if the government is successful in boosting female labour force participation, this could put downward pressure on wages,” the report said. Europe EU and eurozone: Industrial producer prices, excluding the energy sector, rose 0.3 per cent in the euro area in July compared with June, and by 0.6 per cent on the year. In the EU’s 28 members, those prices rose 0.4 per cent on the month, and by 0.8 per cent on the year, Eurostat reported. Prices in the energy sector increased 0.8 per cent in the euro area and by 1.2 per cent in the EU in July compared with the previous month. The highest index increases were seen in the UK, up 1.9 per cent, and Greece, by 0.9 per cent. The largest decreases were in Estonia, where PPI fell 5.0 per cent, and Slovakia, by 0.5 per cent. Czech Republic: The economy grew 0.6 per cent in the second quarter compared with the first three months of the year, but shrank 1.3 per cent compared with the same period last year. Though demand from major trading partners started to thaw out, investment activity fell and an “unusually cold and long winter” hurt gross value added activity such as construction, the statistics office reported. The stocking up on tobacco products at the end of last year caused “uneven contribution of the excise tax from tobacco products,” the statistics office said, which had a strong effect on quarterly GDP results. UK: The construction sector continued to improve with accelerated expansion of output and new business volumes, putting the headline Markit/CIPS UK Construction PMI at a rate of 59.1 in August compared with 57.0 in July. Residential construction was the strongest performing sector, followed by civil engineering. UK construction companies reported higher client spending and new work increases related to housing and public sector infrastructure. Switzerland: The economy expanded 0.5 per cent in the second quarter compared with the first three months of the year on higher private consumption, according to the government. Household final consumption expenditure increased 0.7 per cent, with healthcare a key factor in growth, while general government final consumption grew 0.1 per cent. Fixed investments increased 1.4 per cent because of higher investments in machinery and equipment. Meanwhile, the trade balance worsened and contributed negatively to GDP growth in the second quarter, as exports shrank 0.9 per cent on the quarter while imports rose 1.4 per cent. The services sector continued to recover with 1.6 per cent growth compared with the first quarter, while production in industry and construction suffered and brought down the GDP results. Turkey: Consumer prices eased 0.1 per cent in August compared with the month before, but rose 8.17 per cent on the year, the government statistics office reported. The steepest increases in prices were for education, which rose 1.19 per cent on the month, followed by the hospitality industry, where prices increased 0.76 per cent, and transportation, which grew 0.7 per cent. However, those increases were offset by decreases of 3.62 per cent in clothing and footwear, followed by food, which fell by 0.77 per cent. Producer prices on the other hand grew on the month by 0.04 per cent, and by 6.38 per cent compared with last year. The PPI increased 0.48 per cent on the year for agriculture, and by 7.59 per cent in industry. With additional reporting by Robin Harding in Washington Continue reading
Cool Planet To Open First Commercial Biorefinery In Louisiana
Cool Planet Energy Systems will open their first commercial biorefinery in Alexandria, Louisiana. The facility on the Port of Alexandria in Rapides Parish will serve as a showcase facility leading the way for Cool Planet to build similar facilities across the United States. Construction on the facility is expected to be complete before the end of 2014. Cool Planet is a developer of small scale biorefineries which convert non-food biomass into gasoline, jet fuel and soil enhancing biochar. “Louisiana is known for its substantial oil interests, but now will also have the distinction of being home to the first, of what is planned to become many, production facilities for Cool Planet’s renewable, high-performance gasoline and soil enhancing biochar,” said chief executive officer Howard Janzen. “Our goal for the Alexandria facility is to be economically competitive with conventional fuels made from non-renewable crude oil.” Alexandria was chosen as the site of their first commercial biorefinery due to the support shown by the city of Alexandria and the economic development team from the state of Louisiana. The location also provides access to an abundance of renewable biomass feedstock as well as easy access to barges, rail lines and trucks by which the biomass based products can be distributed. It is believed that the Cool Planet facility will have one of the lowest capital costs per plant in the refining industry, with project economics that work at facilities that are a 100 times smaller then conventional refineries as well as the ability to use a wide variety of biomass materials as inputs. Cool Planet processes biomass through a mechanical biomass fractionating system that uses pressure and heat to create a series of useful volatile components that then go through proprietary catalytic systems to make fuel and biochar. Cool Planet’s technology has attracted investors such as include General Electric, Google Ventures, BP, ConocoPhillips, NRG and the Constellation Energy division of Excelon. – EcoSeed Staff Continue reading
