

Biofuels Backlash: Asian Palm-Oil Producers Shut PlantsPosted by Keith Johnson
U.S. and European biofuel producers are singing the blues these days. But that’s nothing compared to the tsunami overwhelming Asian biofuel makers. The good news? There may actually be a silver lining to it all.
American ethanol refiners, swamped by rising feedstock prices and a capacity glut, have seen economics go south, even with federal subsidies. European biofuel producers are shuttering plants, complaining about unfair U.S. competition and higher feedstock prices.
But in Asia, where demand for transport fuel is growing much faster than in Western economies, biofuel producers still can’t catch a break. Our EC colleague Tom Wright reports today in the WSJ (sub reqd.) that biofuel producers across southeast Asia are shelving plans for tens of billions of dollars of investment in new refineries:
That is an unexpected reversal of fortune for the industry. Just a year ago, Asian companies were rushing to build biodiesel plants to take advantage of subsidies in Europe and the U.S. aimed at promoting the consumption of cleaner-burning fuels. Projects being built or planned were forecast to pump out five million metric tons of biodiesel a year upon completion, or about half of Europe’s total refining capacity in 2007. The Indonesian government boasted that $12.5 billion in new biofuel investments were in the pipeline for that country alone.
The main culprits? Higher raw material prices, a supply glut in Europe (a big export market), and increasing concerns over the environmental impact of biofuels, especially the southeast Asian variety, which often involves deforestation. The higher prices for key ingredients like palm oil are especially painful: Indonesia’s state oil company Petamina has slashed its biofuel blend from 5% to 1% in less than 2 years because the economics just don’t work anymore.
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The result: Some Asian palm-oil producers have scrapped their plans for biodiesel refineries, and only a few new plants have come on line. In Malaysia, for instance, the industry produced just 80,000 metric tons of biodiesel last year, much lower than the country's annual capacity of one million tons, Malaysian Commodities Minister Peter Chin said last week.


Projects being built or planned were forecast to pump out five million metric tons of biodiesel a year upon completion


BINGO! You notice that the mainstream media never bothers to put this into context by comparing it too crude oil? " five million metric tons of biodiesel a year" sounds really impressive until a comparison is made.frankthetank wrote:Projects being built or planned were forecast to pump out five million metric tons of biodiesel a year upon completion
Thats around 30 million barrels. We could burn that up in a few days.




However thinking of the climate in Indonesia it may only be a matter of time before sugar-cane replaces palm oil.

I really enjoying the coming peak-oil termination of rampant consumption, rainforest depletion, ocean fisheries' decline, CO2 emissions, the sprawl lifestyle, '2nd' homes (most people don't 'vacation' in them, they only watch TV), endless mind-numbingly commutes, dumb kids, MacIntoshes and vegetarians.shortonoil wrote:dorlomin said:However thinking of the climate in Indonesia it may only be a matter of time before sugar-cane replaces palm oil.
Thinking about the paucity of nutrients in the soil of the tropical rain forests, without the application of hydrocarbon based fertilizers, their life span can be measured in a very few years.
Most bio-fuels are net energy losers, and unless there is a lot of petrochemicals to plow into them, they won’t last for long. It looks like the age of abundant, cheap hydrocarbons has run it course. Don’t worry about the tropical rain forest, they will outlast the age of oil, their greatest treat, by a few hundred million years.

dumb kids

Cars make kids dumber. They use them for their escapes.shortonoil wrote:pstarr said:dumb kids
The elders have been hoping for this for 10,000 years. I’m not sure it has anything to do with oil.

I'm glad to hear this news. Perhaps the remaining rainforests in Borneo will now stand a chance.
The higher prices for key ingredients like palm oil are especially painful:

I guess you missed the part about "higher feedstock" costs. The price of palm oil is up. More incentitive to plant more. More rainforest chopped down. This makes you glad?

shortonoil wrote:fletch_961 said:I guess you missed the part about "higher feedstock" costs. The price of palm oil is up. More incentitive to plant more. More rainforest chopped down. This makes you glad?
The point is that because bio-fuels are net energy losers, without cheap hydrocarbons to make them they will be, and are, going out of business. No matter how pricey palm oil gets, its production will go down with oil.
![llorar [smilie=llorar.gif]](http://peakoil.com/forums/images/smilies/llorar.gif)

Well, that is an interesting conclusion. I don't see any where in the press clipping that biofuels are struggling with a negative EROEI.

shortonoil wrote:Actually it is rather doubtful that you will see anything of value at all in the Lame Stream Media. The media is about selling advertisers’ products and supplying entertainment to the proletariat.

dorlomin wrote:That is great news. A brief glimps of common sence in a world gone mad. Hopefull this will alleviate some of the pressure on food prices. However thinking of the climate in Indonesia it may only be a matter of time before sugar-cane replaces palm oil.


It depends on what study you read. Studies pumped by interested parties always seem to find an extra energy credit to slip the biofuel industry. Those with no axe to grind tell the truth.Gerben wrote:shortonoil wrote:Actually it is rather doubtful that you will see anything of value at all in the Lame Stream Media. The media is about selling advertisers’ products and supplying entertainment to the proletariat.
I think it's more a question of anything you would value. Most biofuels have a positive EROEI. You might not like it, but that's not the point.

pstarr wrote:It depends on what study you read.

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