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Choices
The world population is growing exponentially and most countries are also growing economically at a high rate, with China and India as front runners. This increasing world market for goods and energy requires an ever increasing volume of resources and feed stocks, many of which are not sustainable. In fact, according to a great many scientists, organisations and industries, for many raw materials we are near or perhaps even past the peak of a maximally possible production rate. This is true for raw materials such as metals (e.g. copper!) but is particularly true for fossil fuels. Experts, also from the oil industry, expect that the demand for petroleum will, within only a few years, be higher than the maximum rate of production. This triggers the question with what it can be supplemented to prevent an economic collapse. All possible alternatives have their advantages and drawbacks and stakeholders such as industries, environmental organizations and of course also the general public argue which alternative we must choose. Coal? For the time being still plentiful and available all over the globe. However, as a fuel coal emits more CO2 per joule generated power than petroleum. Nuclear energy? CO2 neutral, but we do have this nasty nuclear waste management problem. Solar energy? Also CO2 neutral, but rather expensive. Wind and biomass? These renewable sources are indeed CO2 neutral and much scale-up and commercialization experience has been obtained in the past decade. On the other hand, the development of wind and biomass plants will not be able to keep up with the increase in energy demand, let alone replace fossil fuels when its supply decreases. So which alternative should we choose? Personally I am convinced that we are way past the point that we have the luxury to choose. Unless we are heading for a major worldwide long-lasting recession, which everybody is trying to avoid, it is all hands on deck. We can no longer pick only the option that everybody can agree upon but we need to make use of all available alternatives: coal (preferably modern high efficiency plants), nuclear (avoiding first generation plants like Chernobyl), solar (PV and CSP), wind (wherever possible) and biomass (2nd generation). The use of biomass requires extra care since it is, of course, directly or indirectly (through cattle) also necessary for the production of food. Also, of all the alternatives mentioned biomass is the only feedstock

vol. 11, no. 3 - 2008

Content
Editorial The Impact of Biofuels on Commodity Prices p.1 p.2

Sustainable Biomass a Sustainability Certificate can be the Answer Industry and Policy are Searching for p.3

Are algae the ideal raw materials for biotechnology? p.7 Permanent Oil Crisis: Challenges and Opportunities p.8 Calendar of events p.8

that contains complex chemicals and materials that can be used relatively easily to supplement petroleum-based chemicals in chemical and material applications. Therefore, a combination of sophisticated use of its complex compounds and the generation of energy from its waste streams in, e.g., biorefineries, may be the best way to go. Biocascading. In any event, the use of biomass in all kinds of applications is growing rapidly. Despite the gloomy outlook above, for the readers of this newsletter and those of us that contribute to a sustainable world by developing a more biobased economy there is no doubt that this must lead to many more interesting and commercially viable business opportunities in the near future. Prof.dr. Hans Derksen, president Platform Biobased Business

The Impact of Biofuels on Commodity Prices

Global biofuel production has seen a three fold increase over the last 20 years. Price spikes are common in agricultural markets due to a combination of relatively inelastic demand and volatile supply. Historical data (using 1987 as the base year) shows that world wheat prices were at similar level to present levels in 1995 and 1996, less than the 2007 peak in nominal terms but 15 percent higher in real terms. Sugar prices peaked in 2003 and in early 2008 fell below production costs of all major producers (including Brazil).1 Other things being equal, biofuel production should put upward pressure on cereal, oilseeds and sugar prices. However, a closer look at recent price developments suggests that there are a number of factors affecting current commodity prices some of which are cyclical and some of which are structural in nature: Longer-term/structural factors V. Growing demand from emerging economies has increased demand for agricultural commodities. VI. Rising biofuel production, mainly in the US has had a discrete impact on commodity prices and most notably the maize market. VII. Higher oil prices have an impact on the agricultural industry. The Sustainable Development Commission suggests that an increase in oil price from $50 to $100 a barrel could cause an increase in production costs of 13 percent in commodity prices for crops and 3-5 percent for livestock products. VIII. Historically low levels of investment in agriculture and agricultural research have slowed down improvements in productivity with a negative impact on the supply potential.

Short-term/cyclical factors I. Adverse weather conditions affecting agricultural production in many parts of the world explain some of the recent commodity price increases. II. Reductions in stocks due lower than expected harvests have put upward pressure on prices due to the induced volatility and higher risk premium that lower stocks imply. III. International commodity trade has been limited due to the imposition of export restrictions in various countries, putting upward pressure on commodity prices. IV. There is some debate about the impact of the influx of speculative investment on agricultural commodity prices. Whilst some analysts argue that this influx had no impact on prices, others think that it has contributed to recent price rises.

The changes in agricultural prices have historically not been fully reflected in consumer prices. Several studies have attempted to evaluate the future impact of biofuel production on commodity prices; results should be interpreted with caution as work on models that combine agricultural and biofuel markets is still at an early stage. Second generation biofuel production has the potential to reduce land requirements and increase productivity.

Simone Pfuderer, EconomistAgricultural Economics Unit, Defra Maria del Castillo, Assistant EconomistAgricultural Economics Unit, Defra
1

FO Lichts International Sugar and Sweetener Report (2008), 4th January 2008.

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The sustainability of agricultural and forestry production has been a hot topic for many years. But the discussion has peaked when legislation for large scale

ERRMA ERRM
Sustainable Biomass - a Sustainability Certificate can be the Answer Industry and Policy are Searching for
organization in order to ensure confidence in sustainable biofuels (fig. 1). for Renewable Resources (Fachagentur Nachwachsende Rohstoffe FNR) supports the development of an implementable certification scheme for sustainable biomass and bioenergy production and its test in a process oriented pilot phase. The project is known as the International Sustainability and Carbon Certification (ISCC) Project. The certification project being managed by Me Corporate Development GmbH is a multi-stakeholder process. It involves stakeholders from all market participants along the value chain, NGOs and research institutes from different countries within and outside the European Union. They participate in discussing and developing the sustainability criteria, standards, rules and procedures for certification. Finally, once the pilot phase is finished, it is planned that ISCC becomes an international and independent Although there are other initiatives at varying development stages, they are mostly feedstock specific approaches and none of them covers all sustainability criteria. Plus, the co-existence of different systems can lead to multiple uses of individual certificates, double and multiple certification processes, high costs, and most of all, a reduction of credibility and effectiveness. It is bearing all these risks in mind that the ISCC project aims to test a pragmatic, internationally oriented certification scheme that: (i) reduces the risk of non-sustainable production of biomass and bioenergy; (ii) can be used as proof for GHG emissions; and (iii) reduces the administrative burden to a minimum possible. In order to comply with all the objectives, the project is being developed in six different areas at the same time: 1. Process development to ensure sustainability and prove GHG emissions along the value chain (Chain of custody) 2. Development of a meta system to allow the endorsement of existing certification schemes 3. Development and operation of minimum standards of certification according to crop and region 4. Specific calculation of GHG emissions for biofuels and sustainability of the GHG emissions along the value chain, based on a methodological frame set by politics 5. Establishment of verification and monitoring components (certificates, registration unit, market place for certificates, etc) 6. Development of public project appearance (internet) and public relations in pilot regions and relevant industry

market introduction of biofuels was tabled by the European Union, the United States and many other countries.
It is undeniable that biofuels, in order to succeed as an alternative to fossil fuels, have to be produced in a sustainable manner. Too much bad press has almost thwarted their future. It is now necessary to prove in a reliable way that the advantages of biofuels are actually higher than the cost of potential environmental damage caused by their production. Even more so with increasing production volumes and quota mandates. Legislation is in preparation requiring the use of sustainable biofuels, both on European level (Renewable Energy Directive, Fuel Quality Directive) and on national level (e.g. Biomass Sustainability Order in Germany). But so far, there is no system in place allowing it to distinguish between good and bad biofuels. In this context, the German Federal Ministry of Food, Agriculture and Consumer Protection through its Agency

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Sustainable Biomass -

a Sustainability

ERRMA
www.errma.com

Bearing in mind that biofuels are produced in different countries and from different feedstocks, the simulation and analysis of order and delivery processes along the entire value chain for each case is a critical success factor. There are three main types of chain of custody which can provide a link between the final product and the certificate: 1. Book & Claim biofuel traded runs completely separate from the certificate. A certain amount of certified biofuel can be booked and sold to the market. The buyer of certificates can claim sustainability independently of the final product received. 2. Mass Balance certified products can be mixed with non certified ones. The amount of certified product entering the supply chain is proportional to the quantity of certified raw material. 3. Track & Trace product and certificate information are linked throughout the supply chain. This

type can be classified depending on whether it is a bulk commodity approach (mixing of batches with equal status is allowed) or a full segregation approach (no mixing of batches allowed). Each system has its pros and cons that range from credibility to economic costs; which requires a more thorough examination. Plus, applying the theory to real life value chains of biofuels from different feedstock and countries is a bit more complicated. It is essential that the certification itself should occur in a compact and costeffective way; and in view of already existing certification systems, the concept of meta system was developed. This approach will avoid additional certification processes wherever possible. The advantage of endorsing a third party system is the reduction of administrative efforts and costs for the producer, as he must not apply for multiple certification systems. In addition, the possibility to endorse existing systems and to involve initiatives and partners in the

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Certificate can be the Answer Industry and Policy are Searching for
different pilot countries helps to increase acceptance of the ISCC system abroad. ISCC is developing partnerships on equal footing with the respective organizations in pilot countries. Hence, the starting point is to benchmark sustainability requirements of the different initiatives.

ERRMA ERRM
5
In the end, the ISCC project will translate sustainability requirements set by politics into standards and guidelines for certification. The ISCC scheme will be used by producers along the value chain as proof of fulfillment of the sustainability requirements. These requirements will be used for first pilot certifications, which in turn, will provide recognized certificates. The certificates will be linked with the certified land as well and both will be recorded at a central registration, avoiding double or triple use of already certified areas. Thus, certification should serve as solution to proof sustainable production and to dismiss public accusations against biofuels. The project implementation is challenging due to high complexity and conflicting interests. Therefore, the project is designed as a continuous learning process. Nevertheless, ISCC wants to offer a solution to the need for reliable certificates as soon as possible, as customers are requesting already the supply of sustainable biofuels despite the fact that the regulatory framework conditions are not in place yet. Although biofuels are in the focus of the ongoing public debate on sustainability, the demand for a proof of sustainable production and processing will also increase for other applications in the energy, food and feed sectors as well as for industrial bioproducts, either driven by legislation or customers. As many of the biomass feedstocks are identical for these applications, eg palm oil for biodiesel, electricity, food and oleochemicals, only certification irrespective of the final use will have an optimal impact on sustainability. ISCC will provide many valuable recommendations also for these markets. Lucia Munoz, Dr Norbert Schmitz me Consulting Team Cologne www.iscc-project.org

The ISCC project was launched in February 2008 and is expected to last two years. So far, its organization and work plan has been set up and stakeholders from all relevant sectors, including NGOs and research institutes have committed to support it. More than 80 organizations from Europe and overseas are involved already strategic partnerships in pilot countries have been set up. For example, core stakeholders have agreed to participate in the first pilot phase certification of sugarcane, ethanol and palm oil a close cooperation with major oil, trade and biofuels companies has enabled substantial progress in Chain of Custody work. A layout and functionality for registry of value chain elements, like plantations, transport, warehouse/storage and conversion has been defined The sustainability requirements proposed by politics have been translated into sustainability criteria within a draft ISCC generic checklist for certification which has been developed and discussed together with the different stakeholders. The list is based on the analysis of existing studies and initiatives on sustainability criteria GHG calculation for pilot certifications, based on methodological requirements set by politics and on international discussions, standards and initiatives for the calculation of GHG balances is under development

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Are algae the ideal raw materials for biotechnology?

An answer to this question will soon be given during the International Algae Congress that will be held in Amsterdam on 3 and 4 December of this year. This congress will not only focus on biofuels composed of algae but also on other algae applications such as for instance coating components from algae and current developments in micro algae applications for aquaculture and water purification. The organisers are APP, based in Zeist, the Netherlands. Their main reasons for bringing an international audience together during a congress on algae are this products enormous potential, its sustainability, the markets interest and last but not least the advantages of sharing best practices on an international level.
Algae are simple, green, aquatic plants without stems, roots or leaves. They are among the microscopic organisms that form the start of the food chain. Algae are found floating in the sea and fresh water, but they also grow on the surface of damp walls, rocks, the bark of trees and on soil. They contain chlorophyll and other pigments that let them grow by photosynthesis. On land, algae can be useful in improving the fertility of soil by nitrogen fixation. Over the past decade algae have however been implemented by men in an increasing variety of areas such as in biofuels, biomass, electricity production, aquaculture, pharmaceutical products, coatings, cosmetics and nutrition. Algae have proven to offer many opportunities in various current and likely also in other future applications. Following the success of the first Dutch algae congress which took place on the 27th of May of this year in the Netherlands, the organisers have decided to organise an international successor of this congress in order to share the opportunities among a wider, international public. This appeared to supply a want: already great interest has been shown by the international market in attending this event later this year. Not only the audience but also the presenters programme in December happens to be very international with speakers from Belgium, the Netherlands, Germany, UK, Italy, Sweden, Finland but also from Egypt, USA, China and Japan. It will be interesting to hear the developments in this relatively new area from so many parts of the world. Mr. Kyriakos Maniatis of the European Commission will start off the congress with a presentation on the legislative aspects related to biofuels and algae. Furthermore, Mr. Makoto Shiho representing the Japanese Institute for Applied Optics will share with the audience the initial experiences in Japan with a 6-year fuel production project that will start off this month. This project is financially supported by the Japan Science and Technology Agency and several major industries in Japan. Worth mentioning is also the presentation of Mr. Thomas Byrne of Byrne and Company who will speak about products from algal biomass. Mr. Byrne is also secretary of the international Algal Biomass Association (ABO). This Association was founded almost one year ago with the mission to promote the development of viable commercial markets for renewable and sustainable commodities and specialty products derived from algae. One of the purposes of ABO is to serve as the national and international trade association for those desiring to promote commercial applications for algal biomass for instance. Its membership is open to both organisations and individuals. Besides his company, Byrne & Company, also the Boeing Corporation is being represented in the eight headed Board of Directors of ABO. No doubt delegates will leave Amsterdam on the 4th of December with lots of extra knowledge and ideas on the numerous opportunities of algae and will have enlarged their networks with fellow algae experts. For more information, visit the website www.algaecongress.com

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Permanent Oil Crisis: Challenges and Opportunities

Is the continuity of affordable oil supply in the near future in jeopardy? If so, are there any alternatives readily available that can fuel our increasingly energy demanding world? What challenges must be overcome to realise such an energy and resources transition and what commercial opportunities do they present to the keen investor and entrepreneur? These are some of the questions that will be addressed at the first international congress The Permanent Oil Crisis: Challenges and Opportunities that will be held in the Amsterdam RAI Convention Centre (The Netherlands) on 21 and 22 January 2009. Top executives of industries and organisations like Shell, Q8, DSM, Econcern, General Motors, Nedalco, the ASPO, FAO, IEA and IAEA will present their views on what the impact of a more restricted and expensive oil supply is on highly important economic sectors such as food & agriculture, transport & infrastructure, chemicals & materials and energy systems. In two days you will get a comprehensive overview on the energy situation and will learn how you can adapt to it, but also how these changing paradigms may be beneficial to you. For more information, visit the website www.permanentoilcrisis.com

Calendar of events
Lighthouses for the Integrated Biorefinery Concept for biobased products in EU Member States, Wednesday 5th November 2008, Bavarian Representation, Brussels. For more information please contact: Mr. Dietrich Wittmeyer,
General Secretary of ERRMA, E: wittmeyer@vci.de , I: www.errma.com , Prof. Dr. Haralabos Zorbas, Managing Director BioM WB GmbH, Spokesman of the Cluster IBP E: zorbas@bio-m.org

International Algae Congress, 3 & 4 December 2008, Amsterdam, The Netherlands For more information please contact:
Ms. Tessa de Boer, E: tdeboer@agriprojects.nl, I: www.algeacongress.com

International congress: The Permanent Oil Crisis, Challenges & Opportunities, 21 & 22 January 2009, Amsterdam RAI, The Netherlands For more information please contact: Ms. Ilona Leuvenkamp, E: ileuvenkamp@europoint.eu, I: www.permanentoilcrisis.com
Publisher and Editor Platform Bio-based Business P.O. Box 822 3700 AV Zeist The Netherlands T: +31 (0)30 6981800 F: +31 (0) 30 6917394 Subscriptions Subscriptions are for one year and will be extended without notice from the subscriber to terminate the subscription. Termination is possible up to one month before the next subscription period is due without incurring cost. Design & Lay out ESENES designed communication Standerdmolen 8-030, 3995 AA Houten, The Netherlands

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