Archive for February 2nd, 2010

U.S. Department of Defense Addresses the Issue of Climate Change

Posted on February 2, 2010. Filed under: Advanced Biofuel, Field-to-Pump, Hydrous Ethanol | Tags: , , , |

Excerpts from the U.S. DoD 2010 Quadrennial Defense Review
February 1, 2010

Climate change and energy are two key issues that will play a significant role in shaping the future security environment. Although they produce distinct types of challenges, climate change, energy security, and economic stability are inextricably linked. The actions that the Department takes now can prepare us to respond effectively to these challenges in the near term and in the future.

Climate change will affect DoD in two broad ways. First, climate change will shape the operating environment, roles, and missions that we undertake. The U.S. Global Change Research Program, composed of 13 federal agencies, reported in 2009 that climate-related changes are already being observed in every region of the world, including the United States and its coastal waters. Among these physical changes are increases in heavy downpours, rising temperature and sea level, rapidly retreating glaciers, thawing permafrost, lengthening growing seasons, lengthening ice-free seasons in the oceans and on lakes and rivers, earlier snowmelt, and alterations in river flows.

Assessments conducted by the intelligence community indicate that climate change could have significant geopolitical impacts around the world, contributing to poverty, environmental degradation, and the further weakening of fragile governments. Climate change will contribute to food and water scarcity, will increase the spread of disease, and may spur or exacerbate mass migration.

While climate change alone does not cause conflict, it may act as an accelerant of instability or conflict, placing a burden to respond on civilian institutions and militaries around the world. In addition, extreme weather events may lead to increased demands for defense support to civil authorities for humanitarian assistance or disaster response both within the United States and overseas. In some nations, the military is the only institution with the capacity to respond to a large-scale natural disaster. Proactive engagement with these countries can help build their capability to respond to such events. Working closely with relevant U.S. departments and agencies, DoD has undertaken environmental security cooperative initiatives with foreign militaries that represent a nonthreatening way of building trust, sharing best practices on installations management and operations, and developing response capacity.

Second, DoD will need to adjust to the impacts of climate change on our facilities and military capabilities. The Department already provides environmental stewardship at hundreds of DoD installations throughout the United States and around the world, working diligently to meet resource efficiency and sustainability goals as set by relevant laws and executive orders. Although the United States has significant capacity to adapt to climate change, it will pose challenges for civil society and DoD alike, particularly in light of the nation’s extensive coastal infrastructure. In 2008, the National Intelligence Council judged that more than 30 U.S. military installations were already facing elevated levels of risk from rising sea levels. DoD’s operational readiness hinges on continued access to land, air, and sea training and test space. Consequently, the Department must complete a comprehensive assessment of all installations to assess the potential impacts of climate change on its missions and adapt as required.

In this regard, DoD will work to foster efforts to assess, adapt to, and mitigate the impacts of climate change. Domestically, the Department will leverage the Strategic Environmental Research and Development Program, a joint effort among DoD, the Department of Energy, and the Environmental Protection Agency, to develop climate change assessment tools. Abroad, the Department will increase its investment in the Defense Environmental International Cooperation Program not only to promote cooperation on environmental security issues, but also to augment international adaptation efforts. The Department will also speed innovative energy and conservation technologies from laboratories to military end users. The Environmental Security and Technology Certification Program uses military installations as a test bed to demonstrate and create a market for innovative energy efficiency and renewable energy technologies coming out of the private sector and DoD and Department of Energy laboratories.

Finally, the Department is improving small-scale energy efficiency and renewable energy projects at military installations through our Energy Conservation Investment Program.

The effect of changing climate on the Department’s operating environment is evident in the maritime commons of the Arctic. The opening of the Arctic waters in the decades ahead which will permit seasonal commerce and transit presents a unique opportunity to work collaboratively in multilateral forums to promote a balanced approach to improving human and environmental security in the region. In that effort, DoD must work with the Coast Guard and the Department of Homeland Security to address gaps in Arctic communications, domain awareness, search and rescue, and environmental observation and forecasting capabilities to support both current and future planning and operations. To support cooperative engagement in the Arctic, DoD strongly supports accession to the United Nations Convention on the Law of the Sea.

As climate science advances, the Department will regularly reevaluate climate change risks and opportunities in order to develop policies and plans to manage its effects on the Department’s operating environment, missions, and facilities. Managing the national security effects of climate change will require DoD to work collaboratively, through a whole-of-government approach, with both traditional allies and new partners.

Energy security for the Department means having assured access to reliable supplies of energy and the ability to protect and deliver sufficient energy to meet operational needs. Energy efficiency can serve as a force multiplier, because it increases the range and endurance of forces in the field and can reduce the number of combat forces diverted to protect energy supply lines, which are vulnerable to both asymmetric and conventional attacks and disruptions. DoD must incorporate geostrategic and operational energy considerations into force planning, requirements development, and acquisition processes. To address these challenges, DoD will fully implement the statutory requirement for the energy efficiency Key Performance Parameter and fully burdened cost of fuel set forth in the 2009 National Defense Authorization Act. The Department will also investigate alternative concepts for improving operational energy use, including the creation of an innovation fund administered by the new Director of Operational Energy to enable components to compete for funding on projects that advance integrated energy solutions.

The Department is increasing its use of renewable energy supplies and reducing energy demand to improve operational effectiveness, reduce greenhouse gas emissions in support of U.S. climate change initiatives, and protect the Department from energy price fluctuations. The Military Departments have invested in noncarbon power sources such as solar, wind, geothermal, and biomass energy at domestic installations and in vehicles powered by alternative fuels, including hybrid power, electricity, hydrogen, and compressed national gas. Solving military challenges—through such innovations as more efficient generators, better batteries, lighter materials, and tactically deployed energy sources—has the potential to yield spin-off technologies that benefit the civilian community as well. DoD will partner with academia, other U.S. agencies, and international partners to research, develop, test, and evaluate new sustainable energy technologies.

Indeed, the following examples demonstrate the broad range of Service energy innovations. By 2016, the Air Force will be postured to cost-competitively acquire 50 percent of its domestic aviation fuel via an alternative fuel blend that is greener than conventional petroleum fuel. Further, Air Force testing and standard-setting in this arena paves the way for the much larger commercial aviation sector to follow. The Army is in the midst of a significant transformation of its fleet of 70,000 non-tactical vehicles (NTVs), including the current deployment of more than 500 hybrids and the acquisition of 4,000 low-speed electric vehicles at domestic installations to help cut fossil fuel usage. The Army is also exploring ways to exploit the opportunities for renewable power generation to support operational needs: for instance, the Rucksack Enhanced Portable Power System (REPPS). The Navy commissioned the USS Makin Island, its first electric-drive surface combatant, and tested an F/A-18 engine on camelina-based biofuel in 2009—two key steps toward the vision of deploying a “green” carrier strike group using biofuel and nuclear power by 2016. The Marine Corps has created an Expeditionary Energy Office to address operational energy risk, and its Energy Assessment Team has identified ways to achieve efficiencies in today’s highly energy-intensive operations in Afghanistan and Iraq in order to reduce logistics and related force protection requirements.

To address energy security while simultaneously enhancing mission assurance at domestic facilities, the Department is focusing on making them more resilient. U.S. forces at home and abroad rely on support from installations in the United States. DoD will conduct a coordinated energy assessment, prioritize critical assets, and promote investments in energy efficiency to ensure that critical installations are adequately prepared for prolonged outages caused by natural disasters, accidents, or attacks. At the same time, the Department will also take steps to balance energy production and transmission with the requirement to preserve the test and training ranges and the operating areas that are needed to maintain readiness.

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Shell is Taking Aim at U.S. Ethanol Market

Posted on February 2, 2010. Filed under: Advanced Biofuel, Blender's Tax Credit | Tags: , , |

By Steve Gelsi
MarketWatch
February 1, 2010

While a weak sugar harvest this year in Brazil may put a damper on ethanol exports, Royal Dutch Shell is taking aim both at the U.S. and European markets in its new joint venture with sugar giant Cosan.

Royal Dutch Shell executive Mike Williams said the oil major hopes to increase output from its Cosan joint venture to more than a billion gallons of ethanol a year, from about 500 million gallons now.

The sugar-based fuel could then be shipped to the U.S. or Europe, Williams said.

The new joint venture announced Monday would also target 792 million gallons of ethanol to the domestic Brazilian market.

“Our intention is to grow this business into a worldwide opportunity,” Williams said, according to a report by Dow Jones Newswires.

The prospects of more Brazilian ethanol in the U.S. hit a sore point with lobbying groups that support domestic supplies, already suffering from slack demand for car fuels.

Any imports into the U.S. would face an import tariff of 54 cents a gallon. Taking the sting out the cost, however, is a blenders tax credit of 45 cents a gallon offered to distributors who mix gasoline with ethanol.

Christopher Thorne, a spokesman with pro-U.S. ethanol group Growth Energy, said Brazil has been pushing to get the country’s sugar-based ethanol reclassified as an advanced biofuel to help circumvent the existing tariff.

Sugar futures touched a 29-year high of 30.4 cents a pound on Monday, before falling back, on expectations of a weak harvest after heavy rains.

Plinio Nastari, president of Brazilian consultancy Datagro, told Reuters that fungal disease is expected to hurt sugar output.

“This is the perfect illustration of why it makes no sense to become dependent on any foreign source of energy — whether it’s Middle East oil or Brazilian sugarcane ethanol,” the group said. “Between high sugar prices and a sugarcane crop shortage, Brazil can’t meet its own ethanol needs — let alone the ethanol needs of the United States.”

The U.S. imported about 12 million gallons of Brazilian ethanol in November, according to the Renewable Fuels Association,

“Brazil is having a supply issue themselves, and may be ready to import U.S. ethanol despite the 25% tariff Brazil puts on imports of ethanol,” said Matt Hartwig, a spokesman for the Renewable Fuels Association.

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Royal Dutch Shell and Cosan S.A. Sign US$12 billion Joint Venture in Brazil

Posted on February 2, 2010. Filed under: Advanced Biofuel | Tags: , , , |

RTTNews
February 1, 2010

Integrated petroleum company Royal Dutch Shell plc. (RDS-A: News ,RDS-B: News ,RDSA.L: News ,RDSB.L: News ) announced Monday that its unit, Shell International Petroleum Co. Ltd., has signed a non-binding memorandum of understanding or MoU with Brazilian sugar and ethanol company Cosan S.A. (CZZ: News ) in order to form an about US$12 billion joint venture in Brazil. The proposed joint venture will create one of the world’s largest ethanol producers, which will produce ethanol, sugar and power, as well as supply, distribute and retail transportation fuels.

The proposed biofuel joint venture would see both the companies consolidating certain of their existing assets in Brazil, which could dominate Brazil’s ethanol market. Brazil is a leader in biofuel production and consumption because of its abundant land and sugarcane production. The deal would enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil.

Both the companies will now engage in exclusive negotiations towards evolving a binding joint venture agreement. The transaction is subject to the creation of a final transactional documentation, due diligence, regulatory approvals and respective corporate approvals.

In a statement, Royal Dutch Shell’s downstream director, Mark Williams said, “Today’s announcement demonstrates the continued importance of Brazil to Shell. We’re looking forward to joining with a leading company in Brazil to meet the needs of retail and commercial fuels customers in that growing market.”

As part of the proposed 50:50 joint venture, Shell will contribute its 2,740 petrol stations and other fuel-distribution assets in Brazil as well as US$1.625 billion in cash, payable over two years, while Sao Paulo, Brazil-based Cosan will contribute 1,730 retail sites as well as supply and distribution assets.
 
Additionally, Cosan will contribute its sugar cane crushing capacity of about 60 million tonnes per year from 23 mills, as well as its ethanol production capacity of about 2 billion liters per year. Cosan will also bring in US$2.5 billion of net debt into the joint venture balance sheet. Further, Shell would contribute its 50% stake in Codexis and 14.7% stake in Iogen, two ventures exploring next-generation biofuels technologies.

With annual production capacity of about 2 billion liters, the joint venture would enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil. The joint venture would have a network of about 4,500 retail sites and a total annual throughput of about 17 billion liters, with further prospects of growth and synergies.

“Cosan’s vision is to become a global leader in clean and renewable energy. Our size, degree of sophistication and stage of development means we need a partner that not only shares our vision, but also has access to international markets to help us deliver our growth potential,” Cosan’s chairman, Rubens Ometto Silveira Mello added.

RDS-B closed Monday’s regular trading session at $54.53, up $1.15 or 2.15% on a volume of 0.67 million shares, higher than the three-month average volume of 0.63 million shares. CZZ closed at $8.60, up $0.80 or 10.26% on a volume of 2.11 million shares, higher than the three-month average volume of 1.80 million shares.

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    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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