April 21, 2006

Central America: Biofuel Investment Update

The bad news - oil prices are rising once again. The good news - there is a growing economic imperative for developing decentralized energy production facilities using new biomass feedstock. Many of these solutions are modest in scale but provide more third world control over their own energy futures.

From an Reuters article posted on Yahoo News.


Central America Eyes Sweet Alternative to Oil

All the small Central American economies are net oil importers, and record high oil prices are causing economic hardship for local businesses and consumers in a region where a quarter of the population lives on less than $1 a day.

"We need to reduce our dependence on oil by promoting the production of ethanol and biodiesel," Honduran President Manuel Zelaya said recently. "In addition to fuel, what we can generate is a number of important jobs growing sugar cane."

Zelaya's government is also promoting a four-year project to grow 494,000 acres of African palm, a tree with oil that can be converted into biodiesel.

Costa Rica's state-run national gasoline refinery RECOPE began a pilot project last month to add 7.5 percent ethanol to gasoline at 63 gas stations in the country.

The program, funded in part by Brazilian oil company Petrobras, cost $15 million and will eventually be expanded across the country in an attempt to bring down Costa Rica's oil costs, which jumped by 45 percent between 2004 and 2005.

Oil prices and environmental concerns are expanding worldwide markets for ethanol, since burning alcohol instead of gasoline reduces carbon emissions by more than 80 percent.

Green power and nuclear energy are competing to be the solution for reducing pollution from the electricity sector, the main greenhouse gas producer.

"Central American countries can be competitive producing ethanol from sugar and there are strong groups in the private sector who are investing," said Arnaldo Vieira de Carvalho, who promotes lending to alternative energy projects at the Inter-American Development Bank. "If they don't sell it to the local market they can sell it internationally."


For those without access to massive sugar refineries, leftover grease from fast-food chains like Taco Bell is enough to run an environmentally friendly car.

Most projects in the region are small-scale, like the grease-powered car used by Ordonez, but El Salvador last month opened Central America's first biodiesel plant with money from Finland, to produce 400 liters (quarts) of the fuel a day.

The plant will process seeds from the Higuerillo tree, commonly used to provide shade for coffee plants in the region and the fruits of the Jatropha bush, a plant native to Mesoamerica and ideal for biodiesel production.

Guatemalan entrepreneur Ricardo Asturias is also launching a biodiesel project using Jatropha plants and already has some 300,000 growing around the country in order to start fuel production next year.

"This boosts agricultural production and helps the environment," said Asturias. "Step by step, we are learning how to make it profitable."


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