Europe: biofuels from crops to be capped

In a negative long term move for palm bio-diesel, MEPs have voted for a 5.5% cap and ILUC factors for bio-fuels to be set for EU Renewable Energy Directive. The next step is in September.

Furthermore, an influential research papers by a Princeton academic points out that bio-fuels are taking away food from people. This gives fodder for anti-biofuels campaigners to point out that (many) biofuels are bad for the environment and also bad for people.

It looks like several big biofuels markets will be getting more wary of biofuels. It may be up to producer countries to use more of their own product.


News sources:

"MEPs in the influential Environment Committee (ENVI) voted 43-21, with one abstention, to set a cap for fuels made from food crops at 5.5% and include emissions arising from indirect land use change (ILUC) factors such as clearing of forests, wetlands, or grasslands in the Renewable Energy Directive and the Fuel Quality Directive when calculating official emissions impacts. The Commission had already proposed a five 5% cap, but the EU Industry, Research and Energy Committee (ITRE) said last month this should be raised to 6.5% and recommended ILUC factors not be included until the methodology for measuring indirect emissions is more reliable.... The package will now be put to a plenary session of Parliament in September."

News source: Biofuels from food crops to be capped following MEPs' vote; Influential Environment Committee backs cap on crop-based fuels and moves to include indirect emissions in EU directives; weblink:
http://www.guardian.co.uk/environment/2013/jul/11/biofuels-food-crops-capped-meps-vote

"According to new research by Tim Searchinger, a Princeton University research scholar and acknowledged biofuels expert, a tragic equation is buried in existing modelling data used by the EU to establish the effects of indirect land use change (ILUC) – the increased CO2 emissions that displaced agricultural activity may create... When agricultural land that had been used to grow food is given over to growing biofuels, someone somewhere will go hungry - unless previously uncultivated land is taken to grow the displaced food, or yields from existing crops increase commensurately.
But “there is extremely little evidence that you will get additional yield gains,” Searchinger said over the phone from New Jersey yesterday (9 July), “and without that you get two bad responses: You have some land expansion, and people eat less.”.. Searchinger’s reading of one key report produced for the EU by the International Food Policy Research Institute (IFPRI) found that of every 100 calories from wheat or maize diverted to food tanks by bioethanol production, 25 calories were not replaced... “If you step back, take the broader view and see that people are going to have to produce 60% more food by 2050 [to feed a growing world population] that we’re not going to be able to feed entirely from yield gain, biofuels will just compound that problem.”
News source: MEPs to vote on biofuels as study points to hunger, deforestation; 10 July 2013; weblink: http://www.euractiv.com/energy/new-research-biofuels-automatica-news-529200

Liberia palm oil project shareholder in default?

On 8 July 2013, Equatorial Palm Oil (EPO) issued a default notice to Biopalm Energy Limited, part of the Siva Group. The company said: “EPO has, however, advised Biopalm that any dilution of shareholding that results from raising equity in EPO, due to Biopalm's failure to honour its Commitment, should, in EPO's view, result in a corresponding increase in EPO's share in LPD, which is, at present, held 50/50 by EPO and Biopalm as well as an award for damages for loss due to Biopalm's failure to honour its commitments under the Investment Agreement.”

Biopalm was earlier reported to have effective 63.3% stake in the Liberia palm plantation assets via a 50% JV and 13.5% stake in EPO. However, a report in Feb 2012 indicates it has a 26.71% stake in EPO, indicating an increase.

The Liberia plantation concession area is some 170,000 ha. Liberia is the centre of the largest scale oil palm FDI projects in Africa so far. Projects have been held up by land disputes. The other key players are Sime Darby and Golden Veroleum / Golden Agri.


*Please contact Khor Reports if you would like to get a copy of our info briefing on this matter, including profile of Siva Group, and various info collated on Equatorial Palm Oil.


News source:

Equatorial Palm Oil issues default notice to partner
8 July 2013 | 11:23am StockMarketWire.com
The board of Equatorial Palm Oil (PAL:AIM) has issued a written notice to its joint venture partner, Biopalm Energy Limited (a wholly owned subsidiary of Indian conglomerate, the Siva Group) setting out that Biopalm is in material breach of its obligations under the investment agreement signed between the parties on 10 December 2010. Biopalm is required under the Investment Agreement to arrange and/or contribute, either directly or through any member of its group, any external funding required by the joint venture company, Liberian Palm Developments Limited (up to a maximum of US$30,000,000). Notwithstanding Biopalm's obligations to fund LPD up to the Commitment amount, EPO intends to continue to fund LPD and its assets in the Republic of Liberia. EPO has, however, advised Biopalm that any dilution of shareholding that results from raising equity in EPO, due to Biopalm's failure to honour its Commitment, should, in EPO's view, result in a corresponding increase in EPO's share in LPD, which is, at present, held 50/50 by EPO and Biopalm as well as an award for damages for loss due to Biopalm's failure to honour its commitments under the Investment Agreement. EPO continues to negotiate and work with Biopalm regarding the Commitment with a view to an amicable solution being reached, but has reserved all rights to take action against Biopalm under the Investment Agreement. EPO shall make further announcements regarding the above, and its continued discussions with Biopalm, in due course. Story provided by StockMarketWire.com - See more at: http://www.stockmarketwire.com/article/4628151/Equatorial-Palm-Oil-issues-default-notice-to-partner.html#sthash.cjyWmQnf.dpuf

EU due to vote 10 July to limit food crops in biofuels

"EU continues to debate a plan cap the percentage of biofuels made from food crops, with a final vote due to occur on 10 July...Most of the environmental impacts cited in the EEA report are a result of deforestation, draining of peatlands and other land clearance for biofuels, together known as indirect land use change (ILUC)."

News articles include:
Biofuel crop mix 'not favourable for environment'.  A report by the European Environment Agency found benefits vary significantly depending on the source of crops
http://www.guardian.co.uk/environment/2013/jul/03/biofuel-crop-mix-environment

EU votes on crucial cap on biofuels made from food crops. Campaigners fear lobbying by industry and farmers' unions will weaken plans to limit role of food crops in biofuels production
http://www.guardian.co.uk/global-development/2013/jun/19/eu-votes-biofuels-food-crops

Sustainable palm oil: how successful is RSPO certification? The industry's certification body champions the multi-stakeholder approach, but it needs to move faster. Oliver Balch interviews the organisation's secretary general
http://www.guardian.co.uk/sustainable-business/sustainable-palm-oil-successful-rspo-certification

Khor Reports' Palm Oil #3 newsletter: Trade tussles, corporate outlook, prices & more

KHOR REPORTS' PALM OIL JUL/AUG 2013, ISSUE 3: Trade tussles. Corporate: Who’s got the best prices & growth prospects? EU biodiesel: certification, anti‐dumping & ILUC. Nigeria worries about duty evaders. Better info on saturated fats & Vitamin E tocotrienols. Frontier expansion: Nigeria, Mindanao & more. Price outlook muted, eyes on China & crude oil.


View our newsletter here:

http://tinyurl.com/qzeqfgt

(**kindly note this was updated on 10 July 2013, including pg. 7 on average selling prices; earlier version was 2 July 2013).

Contents:
Indonesia’s four land bank issues.
Malaysia’s new minister. 
Saturated fats targeted in standards setting.
Vitamin E tocotrienols.
EU biodiesel certificates.
Indonesia’s new customary forests.
SE Asia’s peat fire season – 20% in OP concessions?
Feature: Trade tussles: EU anti‐dumping duties, new sustainability rules, Argentina’s WTO move, TPPA & GM concerns; Nigeria’s palm protectionism.
Corporate outlook.
Nigeria investors & recent frontier plans. 
Key vegetable oils.
Weather outlook.
CPO technical view.
Price charts - including Oil World's latest price view