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China’s Food Demand Grows
China’s food demand grows Dow Jones Newswires 05/30/2013 @ 10:37am China’s rising hunger is driving ever-larger acquisitions of global food assets as the shifting dietary profile of the world’s most populous nation increasingly puts meat, dairy and processed-food producers into play. Underscoring the trend, China’s Shuanghui International Holdings Ltd. on Wednesday said it agreed to acquire Smithfield Foods Inc. (SFD) of the U.S. for $4.7 billion, aiming to secure more pork for Chinese markets. The proposal is the largest in more than a decade of Chinese ventures to snap up food companies abroad. Other purchases have included state-owned Cofco Corp. buying Australian sugar producer Tully Sugar Ltd. last year for about $140 million, and Shanghai-based Bright Food (Group) Co.’s 2011 purchase of Manassen Foods Australia Pty. Ltd. for an estimated $522 million including debt. Bright Food said last year it would acquire control of U.K. cereal maker Weetabix Food Co. The purchases are part of a broader effort by Beijing to secure the raw materials needed to feed its fast-growing economy. Chinese state-controlled companies in recent years have struck big energy and mining deals. But many of the country’s food investments have had lower profiles. Shuanghui’s bid for Smithfield, the world’s largest hog farmer and pork processor, signals that not just any dish will do. As China grows more wealthy, relatively expensive protein is becoming a bigger portion of the domestic diet. China’s meat consumption would still need to rise about 8% from last year’s level just to catch up to South Korea’s, according to the United Nations’ Food and Agriculture Organization. “It is part of the broad Chinese strategy to invest the country’s current-account surplus into strategically important commodities. And going forward, more transnational acquisitions are possible in meat and dairy,” said Paul Deane, the senior agricultural economist at Australia & New Zealand Banking Group Ltd. (ANZBY, ANZ.AU, ANZ.NZ). Cofco Chairman Ning Gaoning told reporters in March that his company is seeking acquisitions and investment opportunities in more consumer brands in the U.S., Australia and Brazil, suggesting that as Chinese palates get more adventurous, the door will open for imports of more premium foods. Australia may be a favored destination given its resources, Mr. Deane said. Chinese investment in Australia and New Zealand food and agribusiness targets has totaled $1.1 billion since 1995, according to research firm Dealogic. Beef may be a prime target for Chinese buyers, said Rabobank analyst Chenjun Pan. Chinese beef consumption has been rising steadily, with domestic prices more than doubling since 2007, she said. The U.S. Department of Agriculture projected that China’s beef imports would rise to a record 175,000 metric tons this year. Industry data show that China imported about 61,000 tons last year. Milk and other dairy products would also make logical Chinese acquisitions, said Li Guoxiang, a researcher at the state-backed Rural Development Institute of the China Academy of Social Sciences. “If we only rely on domestic resources to develop the animal-husbandry industry, China’s grain production will face challenges, and there will be more serious environmental pollution problems,” Mr. Li said. Relying on foreign resources may also assuage government concerns about having enough food, he said. As rising wealth collides with a string of scandals over tainted food in China, prospective acquirers could also shop for premium processed foods abroad, including olive oil and meat and dairy products, such as cheese and yogurt, Ms. Pan said. “The domestic market can’t convince consumers of food safety, so there’s a lot of space for such acquisitions.” -David Winning in Sydney, Sameer Mohindru in Singapore and Zhoudong Shangguan in Beijing contributed to this article. Write to Chuin-Wei Yap at Chuin-Wei.Yap@dowjones.com Subscribe to WSJ: http://online.wsj.com?mod=djnwires (END) Dow Jones Newswires May 30, 2013 10:51 ET (14:51 GMT) Continue reading
Biofuels Will Play Integral Role In California’s Energy Future, Says New EBI Study
Biofuels developed from plant biomass and purpose-grown crops can substantially move California toward its ambitious energy goals, a new report says, but only through the wise allocation of feedstocks and the success of energy efficiency measures throughout the state. That’s the conclusion of “California Energy Future: the Potential for Biofuels,” a report of the California Council on Science and Technology (CCST) co-authored by Energy Biosciences Institute scientists Heather Youngs and Chris Somerville. The study is one of seven produced by the CCST’s California’s Energy Future Committee, which was tasked with understanding how the state can meet aggressive reductions in greenhouse gas (GHG) emissions required by California policy by 2050. The biofuels paper, according to lead author Youngs, a Senior Fellow at the EBI, addressed six scenarios of varied supply and demand options. They illustrate that the degree to which biofuels may help California meet its emissions goals depends upon how future demand for fuels rises or falls and what technologies are developed. Other factors include energy crop availability, investment decisions, public acceptance, and competing demands for renewable energy resources. “The concerns regarding large-scale use of biomass for energy in California are largely a matter of sustainable resource management,” Youngs said. “Judicious use of feedstocks will be required to obviate long-term sustainability concerns and maximize efficient resource management.” The researchers concluded that next-generation biofuels can reduce greenhouse gas emissions of transportation to meet the target GHG reduction goals of the state, but deep replacement of fossil fuels through implementation of low-carbon lignocellulosic ethanol and advanced biomass-derived hydrocarbons (drop-in fuels), and reduction in demand, are required. The challenge for California lies in landmark State Executive Order S-03-05, signed by Arnold Schwarzenegger in 2005. The target: reduce greenhouse gases (GHGs) more than 80 percent from 1990 levels by 2050. The California Legislature has also enacted legislation to encourage low-carbon technologies. Assembly Bill 32, The Global Warming Solutions Act of 2006, put a 2020 GHG target officially on the books. It also paved the way for the Renewable Portfolio Standard that requires 33 percent renewable electricity by 2020, and for adoption of California’s landmark 2009 Low Carbon Fuel Standard. The CCST’s first report in its California Energy Future series summarized the conclusions of a two-year study — in order to reach those goals, a little bit of everything will be required. This includes increased efficiency through reduced demand, shifts to electrification, decarbonized electricity production, and decarbonized liquid and gaseous fuels. Subsequent reports reveal the details, delving into nuclear power, transportation and building efficiency, electricity from renewable sources, and advanced technologies. One key finding of the Committee was that low-carbon fuels are absolutely required to reach the GHG reduction goals. Even with electrification of some vehicles, liquid fuels will still be required for aviation, marine and heavy-duty transportation. “Substantial amounts of low-carbon biofuels would be required even with optimistic efficiency, electrification, and implementation of other renewable energy sources,” the authors state. California has a policy goal of producing 75 percent of its biofuels from in-state resources. Biofuels can be produced using agricultural wastes, forest thinnings and harvest residues, municipal wastes, and purpose-grown energy crops such as perennial grasses and short rotation woody crops. According to the report, this could be difficult. The state could produce 40-120 million tons of biomass or 3 to 10 billion gallons of fuel each year, meeting up to 60 percent of the 2050 demand in the most optimistic case. Success will depend upon overcoming a number of economic, social and sustainability barriers, Youngs said. “Biofuels could reasonably be imported from other states or countries like Brazil,” she noted. “While imported biomass could supply in-state biorefineries to meet the 75 percent goal, this solution would be more costly than the import of biofuels themselves to meet the GHG reduction goals. Decisions regarding biomass use and biofuel import will greatly affect the ability of the state to meet its policy goals.” The authors expressed confidence that future technologies could be deployed to produce a new generation of low-carbon biofuels, like cellulosic ethanol and drop-in biofuels, to meet the demand by 2050. They also urged the proper choice of species and production criteria for feedstocks and fuel conversion technologies by region in the state. This includes development of arid-tolerant feedstocks, water-minimizing conversion technologies, use of grasses that sequester soil carbon and recycle nutrients, and use of plants that can tolerate poor soils and do not compete with food or feed production. All of these issues are being studied at the EBI in Berkeley and Illinois. Source: University of California – Berkeley Continue reading
Greener Pastures For Biopower
June 10, 2013 By Mackinnon Lawrence, principal research analyst, Navigant Research Recent data released by the Energy Information Administration (EIA) paints a cloudy picture for electricity produced from biomass — or biopower — in the United States. According to EIA, total net electricity generation from wood biomass reached 37.54 TWh in 2012, increasing less than 0.2 percent over 2011 totals (37.45 TWh). Relative to wood biomass production, electricity produced from waste biomass jumped to 20.03 TWh in 2012, representing a 4.2 percent increase over 2011 totals (19.22 TWh). Both segments trail growth rates observed among competing renewable technologies like wind and solar. Installed biopower capacity across Europe is nearly four times that of the U.S. and, according to Navigant Research forecasts, electricity generation from biomass in the region is expected to reach nearly 300 TWh by 2020 under an aggressive scenario. Sluggish expansion in the U.S. belies biopower’s potential as a renewable source of baseload power production. Dedicated large-scale facilities — defined as power stations with installed capacity in excess of 50 MW — for a time, were hailed as potential cornerstone players in emerging renewable energy portfolios. Using either wood biomass or the biogenic fraction of municipal solid waste (MSW), these facilities have substantial potential. Waiting for Harvest Proponents point to a range of potential biomass sources across the country that could support broader scale-up efforts. The thinning of forests across the Western U.S. produces an abundance of fuel while reducing the threat of wildfires, a danger that has ravaged many Western states in recent years. Pine beetle infestation across the Rocky Mountain region has led to efforts to identify potential markets for millions of acres of dead timber. ______________________________ The biopower industry must galvanize support in Washington despite a checkered public image. ____ _______________________ Despite the availability of this fuel at no cost, save for the expense of aggregating and collecting it, access has proven to be logistically challenging. Much of this biomass is located on federal land, which under existing federal regulations and protected by a complex patchwork of laws designed to support broader conservation efforts. The hard-to-harvest nature of these resources, which are scattered across millions of acres of variable terrain, also prevents their aggregation at a price point that can simultaneously pay for the service while also competing with incumbent fossil fuel resources. Beyond logistical challenges associated with feedstock aggregation, challenging economic conditions have also led to anemic growth in recent years. Shale gas, in particular, has emerged as a cheap and abundant source of fuel for baseload power generation across the U.S., and could serve as a bridge fuel for renewable power generation technologies, just as a slew of coal-fired plants are scheduled to sunset or shutter operations due to tightening emissions regulations under proposed Environmental Protection Agency (EPA) regulations. Meanwhile, the logistics associated with collecting, aggregating, transporting and processing biomass feedstock drive up the cost of biopower production considerably. Based on the National Renewable Energy Laboratory’s transparent levelized cost of electricity (LCOE) database, dedicated biopower facilities operations and maintenance (O&M) costs are on average 40 percent to 240 percent more expensive than natural gas. Project developers indicate that biopower facility economics decline rapidly once feedstock is sourced beyond 50 miles. Combined with a lack of 24/7 applications for heat c-produced at biopower facilities, the cost of unsubsidized electricity generation from biomass can be prohibitive. Greener Pastures While larger dedicated biopower facilities face significant headwinds, a number of biopower-related opportunities are beginning to materialize across the United States. Growing demand for biomass that has been compressed, or “densified” to support aggressive bioenergy targets across the European Union, is driving a boom in the pellet production capacity in the U.S. Southeast. Unlike the Western U.S., much of this forest cover sits on private land and is already harvested for commercial purposes by a well-established lumber industry. Supporting biopower stations of more than 100 MW across the European Union, European utilities such as RWE and Drax have vertically integrated their operations by owning and operating pellet production facilities in Georgia and Louisiana. United States pellet production is expected to expand from three million tons in 2009 to 10 million tons by 2015. Integrated biorefineries, which are primarily designed to produce advanced biofuels and biochemicals, represent a potential growth area for electricity production from biomass as well. First-of-a-kind facilities have recently commenced production providing electricity for onsite consumption and export to the grid. Under an optimistic scenario, Navigant Research forecasts that nearly 5 GW of new cogeneration capacity at biorefineries could come online by 2020 in the United States. This represents an eleven-fold expansion over installed generation capacity in 2012 (465 MW). To realize potential growth in these segments, the biopower industry must galvanize support in Washington despite a checkered public image. Scrutiny over emissions, sustainability, and deforestation has led to the cancellation of projects in several states and made policymakers reluctant to extend the incentives needed to support industry growth. Ultimately, biopower’s future in the U.S. remains promising, but for now the sector lacks the right mix of incentives and market signals to drive faster expansion. About the Author Mackinnon Lawrence is a principal research analyst contributing to Navigant Research’s Smart Energy practice, with a focus on advanced biofuels and bioenergy. Lawrence has extensive experience as an attorney, consultant, and analyst with deep expertise on topics ranging from environmental policy and international affairs to clean energy. Continue reading
