ENERGY: by Patrick J. ByrneNews Weekly
US opens new ethanol plant every 10 days
, May 13, 2006
As the global energy crisis deepens, Microsoft founder Bill Gates has put US$84 million into an ethanol plant, signalling to investors that ethanol is now big time, writes Pat Byrne.Bill Gates, founder of the Microsoft empire and one of the world's wealthiest men, has put US$84 million into an ethanol plant, signalling to investors that ethanol was now big time.
With oil prices now at record levels and set to stay high - compared to the US$20-30 a barrel that the world had become used to - and concerns over security of future supply from the Middle East, investment in ethanol production is booming worldwide.
According to Bob Gordon, of the Canberra-based Renewable Fuels Australia, "There (are) massive amounts of money going into investing in new plant and equipment production capacity in the United States and Brazil and in Europe, and there has been a major transition.
"In the United States at the moment, we're seeing a new ethanol plant opened in the US every 10 days. Over the next 12 to 18 months, we'll see an additional 7 to 8 billion litres of new ethanol produced and entering into the US transport fuel market. So this is an industry that's going forward rapidly."Nowhere near target
In contrast, the Federal Government's target is for Australia to produce just 350 million litres by 2010, less than one per cent of the country's transport needs. This is nowhere near the target of many other nations that are aiming at having ethanol satisfy 5-10 per cent of their country's needs in the next few years.
Speaking further on the ABC Radio National's Bush Telegraph
, Mr Gordon said that, in contrast to what is happening in the big economies overseas, Australia would have "to be amongst the slowest in the world, unfortunately. In most of the countries that I've talked about - this includes China, India, Japan, even countries like the Philippines and Thailand - they're moving very aggressively to reduce their exposure to imported oil and their dependence on imported oil.
"Australia in some ways is fortunate that we have large volumes of gaseous fuels, but the fact is we'll also run out of our crude oil reserves within seven to eight years. So we do have a problem. The desire is there, the investment dollars are there, the key factor will be: do we get access to this market to ensure that these fuels get to the public?"
Shane Kelly, managing director of the agribusiness investment group, Advisor Edge, says the price of oil will drive investment in new ethanol plants in Australia. Interest already is such that two companies seeking money for ethanol plants raised their capital in 24 hours.
Speaking also on Bush Telegraph
, he said that ethanol "might be the sort of industry that some of the larger infrastructure fund-managers are interested in looking at. The Macquaries of the world, with so much money now being invested in private equity funds, they're obviously looking for acquisitions that are going to generate good returns for investors, and we'd expect that the ethanol industry could be a fairly attractive option for them."
Australia is going to have to invest heavily in the ethanol industry, according to José Luiz Olivério, senior operational vice-president of the Dedini company, Brazil's leading ethanol plant and component manufacturer.
Mr Olivério told Queensland Country Life
, "Everyone knows that the world's energy economy is mainly based on oil, but it's about to finish - sometime after 2050.
"So we need to prepare ourselves for a new kind of energy source and that source is bio-mass.
"Ethanol from sugarcane is the best utilisation of biomass, with one hectare of land in Brazil able to produce 7,000 litres, which is the 'king' in terms of capturing solar energy and transforming it into biomass."
Last year, in his home country, two-thirds of all new car sales were of flex-fuel cars. They are capable of running on any mix of conventional fuel and ethanol. They have a computer chip in the fuel line to alert the electronic fuel-injection system to adjust to the blend of fuel. Now the big car producers, GM, Ford and the Japanese companies are out to master this technology.
Brazil produces 430 million tonnes of sugarcane a year, half going into ethanol production. Australia produces just 35 million tonnes of cane, with only a tiny proportion going into ethanol. Ethanol production has almost eliminated Brazil's reliance on imported fossil fuel.
In contrast, the proportion of Australia's trade deficit attributable to imported fuel is now $9.9 billion (annualised over the 2005-06 year), a 20-fold increase since 2000-01,
according to Queensland Senator Barnaby Joyce.
The Queensland Government has just awarded $700,000 in grants to Freedom Fuels Retail, Neumann Petroleum and United Petroleum to convert 54 retail outlets to supplying E10 fuel. This is part of a $7.3 million campaign to promote the ethanol industry.