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  • Archive for April, 2010

    Brazil Awards Belo Monte Dam Tender


    2010 - 04.23

    Despite fierce opposition from environmentalists Brazil has awarded the tender for a controversial hydro-electric dam project to be the world’s third largest. The government mounted a rushed appeal to beat back a last minute suspension order and since then they have pushed ahead with the bidding process to begin the construction.

    After a succession of court injunctions, which had blocked and unblocked the auction process the contract was finally awarded to Norte Energia, a consortium led by a subsidiary of the state electricity company Electrobras.

    Throughout the decision process for the Belo Monte dam environmental activists and indigenous groups staged demonstrations decrying the dam as ecologically irresponsible and a threat to the livelihood of 12,000 families. The majority of those are Brazilian Indians living on the banks of the Xingu River, which would feed the facility.

    Protestors surrounded the entrance to the National Electric Energy Agency in Brasilia, where the tender process was held and brandishing placards that read ‘We the indigenous demand justice and respect.’ Greenpeace along with roughly 500 activists also dumped three tons of manure in front of the building.

    “There are other possible energy sources, such as wind power, biomass or solar,” a Greenpeace spokesman said.

    It seems that the opponents of the construction are not deterred by the awarding of the tender and vow to continue.

    “We will not be discouraged, we will continue to demonstrate,” said Renata Pinheiro of the Xingu Vivo movement.

    The next demonstration is likely to be a planned occupation of some of the 500 square kilometres of Amazon rainforest land, which Greenpeace predicts will be flooded by the dam. Greenpeace have also claimed that the dam will also divert some 100 kilometres of the Xingu River in an area that is home to 20,000 to 30,000 families.

    It hasn’t even been built yet and the dam is already causing huge international controversy, with even James Cameron the director of ‘Avatar’ giving his support to the opponents and drawing parallels with his natives versus exploiters film. Cameron even wrote a letter to President Silva urging him to rethink the plans.

    Calling the dam an ‘affront to environmental laws’ the regional justice ministry in the state of Para tried to stall the tenders for the $10 billion Belo Monte project in a ruling. The judge ruling in the case said that there were too many questions remaining over how the huge project would affect the flora and fauna in the region as well as what would become of the families who would have to be relocated.

    However, the government is adamant that the dam is essential to its plan to boost energy production in Brazil as much as three fold over the next two decades. To give the government their due the benefits of the dam are pretty damn attractive (forgive the pun). The dam would be the third biggest in the world and has been defended by some of the local population who hope to benefit from the estimated 18,000 direct jobs and 80,000 indirect jobs that the government says the project will create. The Belo Monte dam has been estimated to cost $11.2 billion and produce 11,000 megawatts, which could potentially supply 20 million homes with power. Already hydro-electric power accounts for 73% of the energy produced in Brazil.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    Brazil and Paying the Carbon Debt


    2010 - 04.22

    A study published on 8th February claimed that the extent of plantations to produce biofuels could create a carbon debt that the country would take more than two centuries to pay. The authors of the study predict that the production of ethanol and biodiesel will be responsible for roughly half of the 121,970 square kilometres of deforestation projected for 2020.

    They came to this figure by calculating that although plantations of crops such as sugar and soybeans occupy land previously used as pastures, cattle would then be pushed  onto newly cleared land.

    The lead author of the study, David Lapola from the University of Kassel stated that results of the statistical data are so harmful in terms of carbon dioxide emissions, which are produced by forest loss that it would be better to continue using fossil fuels.

    “This analysis tells us that we have no carbon dioxide reductions within the next 250 years, if biofuels are used in Brazil and not avoided indirect changes they produce on the land use, “said the researcher.

    Due to the high productivity of oil for feedstock the authors of the report found that palm oil would be a more cost effective option. To satisfy the demand for 2020 biodiesel proposal by the Brazilian government the researchers predict that palm oil would require 4,200 square kilometres of plantation land compared with more than 100,000 square kilometres needed for soybeans. The authors also suggested a 6% increase in the density of cattle per hectare across the country in order to prevent further outbreaks of deforestation over the next ten years.

    For Lapola he believes it is not worth continuing the expansion of new plantations to produce ethanol and biodiesel if Brazil doesn’t achieve a balance between biofuel production and the use of land. In his opinion the benefits would only be short term in the case of achieving a balance.

    “I do not think in 2100 we are able to generate power for fifteen billion people through sugar cane or palm oil. Biofuels are a good solution to reduce emissions of greenhouse gases in coming decades, but in the long term, humanity will have to find another source of energy.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    James Cameron Talks Conservation


    2010 - 04.21

    Last month film director James Cameron spoke on the last day of the International Forum on Sustainability. The event was attended by numerous political representatives, businessmen as well as Al Gore, the former Vice President of the United States.

    The central theme to Cameron’s speech was the importance of gaining public support and awareness for preserving the Amazon. He went on to urge the attendees that there is not much time to reverse the damage that has already been done. He estimated that they had between five to ten years before the damage would be irrevocable.

    In his speech Cameron urged the Brazilian government to rethink building the Belo Monte dam in Para. He claims that the dam will divert the waters of the Xingu River and affect the lives of 25 thousand local residents. Cameron is expected to go visit the site after the conference in order to see for himself exactly what the consequences of building the dam will be. At the end of his speech James Cameron was applauded by Jecinaldo Sater, the Secretary of State for indigenous peoples (SEIND) from the Satere-Mawe tribe.

    On a related note, James Cameron has denied rumours that the second Avatar film could be filmed in the Amazon as the first was recorded with the use of computer graphics. However Cameron did say that he wanted to save some work in the state, which could be used to put together a documentary.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    Biomass Industry in UK Threatend


    2010 - 04.19

    There is a growing demand for material from a new fleet of biomass plants and according to a forestry trade group the UK suppliers will struggle to meet demand.

    Late last week a new report from the Confederation of Forest Industries was released stating that the rising demand for fuel from large scale biomass energy plants could leave the UK reliant on imports of wood chips and pellets for the first time. In addition a study entitled Wood Fibre Availability and Demand in Britain 2007-2025 predicts that the domestic supply of wood chips and pellets will be exceeded by 2012 if the plans to build new waves of biomass power plants go ahead.

    If all the biomass plants in the pipeline are built then the amount of imported wood could rise rapidly to roughly 27 million tonnes per year. By 2025 the demand could almost equal the size of today’s global wood fibre biomass trade. Demand for a variety of different kinds of timbers grown in Britain, including short rotation coppice and sawmill by-products such as wood chips will increase significantly should even a small percentage of the energy plants become operational.

    The increased demand for wood fibre to generate energy has been prompted by the government’s climate change policies and associated incentives such as Renewable Energy Certificates.

    In the short term prices are expected to increase as pressure is put on global supply chains, which could potentially affect the existing and potential new users of wood fibre. Further pressure could be put on the availability of wood fibre in Britain by the Renewable Heat Incentive, which is due to be launched in 2011. This news will further strengthen the case for investment in improving the biomass supply chain and has been welcomed by forestry firms and wood chip producers.

    However, supporters of biomass power maintain that in order to maximise the carbon emission savings from wood fired power plants it is necessary to only use supplies of wood chips and pellets from those sourced close to the facility.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    The Avatar Battle is Being Enacted in the Amazon


    2010 - 04.16

    Recently Director James Cameron said that a real-life ‘Avatar’ battle is being enacted in Brazil’s Amazon rainforest, where indigenous groups are trying to halt the construction of a huge hydroelectric project.

    It was during an interview with The Associated Press that Cameron said that he was in Brazil’s capital to support the native people and environmental groups as they begin staging protests against the Belo Monte dam project.

    It was just last month that Cameron was in the Amazon with the former US Vice President Al Gore attending an environmental summit. His return this month was primarily to promote the release of his blockbuster film ‘Avatar’ onto DVD. In the film the fictitious Na’vi race fights to protect its homeland, the forest-covered moon, Pandora, from plans to extract a substance equivalent to oil. Cameron says he came to Brasilia on his own initiative as he was drawn to the activist’s plight.

    From the day it came out in the cinemas ‘Avatar’ has struck a chord with environmentalists all over the world, from China where millions have been displaced due to huge infrastructure projects to Bolivia, where the nation’s first indigenous president, Evo Morales praised the film for sending the message of saving the environment from exploitation.

    “I’m drawn into a situation where a real-life ‘Avatar’ confrontation is in progress,” Cameron said in a telephone interview while en route to protests taking place in front of the Mines and Energy Ministry. “What’s happening in ‘Avatar’ is happening in Brazil and places like India and China, where traditional villages are displaced by big infrastructure projects,” he added.

    If completed the $11 billion Belo Monte hydroelectric dam would be the world’s third largest. It was cleared for construction on 1st February by the Environment Ministry and bidding for prospective builders is due to take place later this month.

    It looks like it is unlikely that Cameron will be able to sway the government’s decision as the Brazilian government has already said that even should they not be able to find enough private investors for the dam’s construction then the country still has enough funds to finish the project themselves. President Luiz Inacio Lula da Silva’s administration argues that the dam will provide clean energy and is essential to meet current and future energy needs.

    Not surprisingly environmentalists are sharply opposed. They argue that it will devastate wildlife as well as the livelihoods of 40,000 people who live in the area that is scheduled to be flooded. They claim that the energy generated by the dam will go to the big mining operations in the Amazon and not to the average person.

    Cameron has said that he wrote a letter to President Silva requesting a meeting and urging him to rethink his position on the project, however he has not received a reply.

    “I wrote to him that, ‘This is an opportunity for you to be a hero, a visionary leader of the 21st century, and modify Brazil’s path in such a way that you have sustainable economic growth instead of economic growth that has serious consequences for certain sectors of the population,'” Cameron said.

    If he and Silva were able to meet Cameron said that he would tell him that he believes North America and Europe should help pay to preserve the rainforest, as it provides a service to the entire world by helping to fight global warming.

    Arguably the world’s biggest defence against global warming the Brazilian Amazon acts as carbon ‘sink’ or absorber of carbon dioxide. But it is also a great contributor to global warming as about 75% of Brazil’s emissions come from rainforest clearing.

    “If North America and Europe have been responsible for the carbon pollution that started us down this inevitable slide of global warming, then they should take financial responsibility for those services that nature naturally provides,” Cameron said.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    Gaining Energy from Wood Waste


    2010 - 04.14


    Merica a sustainable energy firm based in Hawaii has begun investigating the potential for a biofuels industry drawn from wood waste in New Zealand.

    Last week the company’s chief technology officer, Robert Rapier met government officials as well as research and forestry companies. Potentially Merica could offer both investment and technological support and any decision to go ahead could result in a major investment in New Zealand’s clean energy future, most likely in partnership with private local firms.

    “We are trying to determine if our technologies mesh up with well with the biomass resources and the demand for power [primarily diesel and jet fuel] in New Zealand.”

    Before anything can be done there are some important calculations to be made first, such as the costs of refining and transporting the wood compared to other fuels. There is a fine balancing act between growing enough sustainable biomass, leaving enough for the logging industry and having enough waste to nourish the soil.

    In a few months the principals will be coming to New Zealand to see things for themselves while things are still in the ‘early due diligence stage’.

    “But I think they’re both pretty committed to investing in New Zealand. They’re both familiar with New Zealand, they’ve spent time here, they like the country a lot, and they feel it’s ideally situated for what we’re trying to do.”

    Mr. Rapier has claimed that New Zealand is a bright spot for being able to offset its own energy needs. It is similar to Hawaii, which also has a proportionately low population, big biomass sector and largely imports its fuels.

    “Our theory is that we could be sustainable there on Hawaii and our view is New Zealand could be sustainable because of your remote location and the amount of biomass you have.”

    Over the next three to five years Mr Rapier aims to build a large biofuel refinery.

    “Ultimately we’d like to build a plant like that but … if the economics don’t work out we’re also looking at what I call enabling technologies.”

    To make biomass more affordable to transport these technologies would be aimed at packing more energy into it. Then the wood could be turned into a charcoal like product or liquid fuel. This would be too dirty for diesel engines but would be ideal for power production.

    “But your power here in New Zealand is very cheaply priced. So it may be hard to beat and use that for electricity generation.”

    As well as being a holding company for various biofuel businesses, Merica is looking into setting up a biomass trading platform. Similar platforms are already operating in Europe and ensure security of supply.

    “We feel like biomass costs will go up over time and we don’t want to be in the situation where our business becomes at the mercy of rising biomass costs.”

    Mr Rapier has confirmed that he has spoken with the University of Canterbury and Crown research institute Scion. Also just last week he visited with Professor Shusheng Pang, director of the university’s Wood Technology Research Centre. Professor Pang said that Merica’s work was preliminary but ambitious and encouraging.

    “We have the technology available, and we have been working with a number of companies to get the investment but in New Zealand it seems there are limitations in terms of investment to build a commercial-scale plant.”

    Already the university has a large-scale model of a plant that converts wood waste into electricity and liquid fuel. A commercial-scale plant using four tonnes of waste an hour could generate 5 to 6 megawatts of power, enough for 40,000 to 50,000 homes.

    Asked whether he had spoken to Air New Zealand, which is trialling a jatropha product as a jet fuel, Mr Rapier said that “without saying too much, I’d say they’re definitely interested in the kind of fuel we’re producing”.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    Forestry Projects are Essential to Saving the Amazon


    2010 - 04.13

    A forestry project on the Jari River in northern Brazil is being praised as a model for preserving the world’s largest rainforest. Since harvesting began in 2003 every six months the Jari project is inspected and certified by the Forest Stewardship Council (FSC), an international industry watchdog.

    The public debate over saving the forest was renewed in January after evidence that the pace of Amazon deforestation had increased after falling for nearly three years. A rift was also opened in President Luiz Inacio Lula da Silva’s government.

    Every year loggers create environmental havoc by illegally clearing vast swathes of forest for timber and farmland and yet they generate very little long term income. However a handful of forest management projects have surfaced as conservation models, which are able to extract resources while at the same time creating very little impact on the environment.

    “Selling certified timber harvested in a sustainable way is the only solution for the Amazon,” said Augusto Praxedes Neto, a manager at Brazilian pulp and paper company Grupo ORSA.

    Located on both sides of the Jari River in the north-eastern Amazon region ORSA has managed the world’s largest private tropical forest for over five years. Every thirty years they harvest 30 cubic metres (12,713 board feet) of timber per hectare (2.47 acres), which is just under the natural regeneration rate. Trees are felled and transported so as to cause minimal impact on the forest and are recorded in a computerised inventory.

    “Illegal loggers kill 30 trees to get one. These projects protect far more trees than they extract,” said Ana Yang of the Stewardship Forestry Council (FSC) in Brazil.

    “If the government were to put the same effort into sustainable forest management that it put into developing agriculture in the 1970s and 1980s we could preserve much of the Amazon,” said Judson Ferreira, a senior researcher with government farm research institute Embrapa.

    However the government favours a more cautious approach, which is why it has selected three companies to manage 96,000 hectares (237,200 acres) of forest each, this is the first such tender of federal land.

    “Forestry management is a great alternative and ORSA is a good example of it but we want to take things slowly,” Tasso Rezende, head of Brazil’s forestry service, told Reuters.

    “We need several projects doing well over a long period — private ownership in the Amazon is controversial.” Yang went on to explain that in order for forestry management to really take off the authorities need to establish who rightfully owns the land, cut the red tape and tackle illegal deforestation. “It’s still easier to get a license to cut trees than to plant or manage them,” she said.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    US Timber Growth Constrained by Downturn in US Housing Market


    2010 - 04.12

    According to a report released last week there are signs that while the economy is recovering the forest, paper and packaging industry isn’t safe yet. An international panel of sector leaders told Deloitte Touche Tohmatsu for its Compass 2010 Global forest, paper and packaging sector outlook that while increased construction is good news for lumber producers in the US, growth is constrained by a continuing downturn in the housing market.

    “Until there is a fundamental shift in the strength of the U.S. housing market, there will be no meaningful demand increase [for lumber] in North America,” the panel said.

    The panel also commented that the North American newsprint market ‘has yet to hit the bottom’ and the overcapacity in the Europe segment is weighing on prices. Still, “the [European] paper market has shown positive signs so far in 2010,” the report says. “A better balance and more disciplined approach to demand have resulted from plant closures, enabling the market to rationalize capacity and adjust prices.”

    The entire forest products industry is at risk of future shrinkage through consolidation and bankruptcy and smaller companies are vulnerable in particular. Because of this there are now few newsprint producers left in Europe and North America.

    China’s economic stimulus money has created boom conditions and has for that reason has been identified by the panellists as a source of growing demand. “The demand for lumber and building materials is stronger now than it has ever been,” the report notes.

    Also, “Northern European players are evaluating the investment potential in South America, particularly Brazil, Argentina, and Uruguay, because of the improved local economic conditions and as export markets for building materials and pulp.”

    The report states that by not having green products the industry is at a competitive disadvantage. However development of environmentally friendly products depends heavily on the customer and pressure from society.

    The report notes that the industry is already the world’s largest producer and user of bioenergy. Because of this biofuels will become an increasingly important part of the future growth for the industry.

    “Growing investments in biofuels from wood residues could improve operating margins and create a lower dependence on fossil fuels for producing energy internally,” said John Dixon, paper & packaging leader, Deloitte Consulting LLP in the U.S. “Several European and North American companies are placing bets in biofuels for future revenue growth.”

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    The Benefits of Improved Forestry Management


    2010 - 04.08

    If you want to make money quickly then IFM or Improved Forestry Management is not for you. Long term planning is required as well as careful monitoring of forests, which includes the culling of undesirable trees and the nurturing of vegetation along the waters edge to improve water quality.

    Managed forests are divided into clusters of trees, which are managed as a unit and called ‘stands’. On forestry plantations stands usually consist of similar trees, however natural forests don’t grow that way. In some cases trees, such as the western red cedar thrive in the shade of much larger trees and can’t be grown in homogenous stands.

    “You want to create a stand that has a number of different layers,” says Bettina von Hagen, President of Oregon-based Ecotrust Forest Management. “You need a canopy layer, an emergent layer, and a shrub layer; IFM is about setting up processes that will result in those changes.”

    This makes improved forestry management much more labour intensive than traditional industrial forestry. On the plus side the work tends to be more consistent over time as it requires people to enter the forest more frequently instead of just during the final harvest.

    Such procedures also open the door to other payments for ecosystem services, such as water quality credits. However, these are not currently planned for the Sooes project.

    “The potential for biodiversity credits is low there, because there just isn’t that much development in the region that would lead to mitigation opportunities,” says von Hagen.  “But some of our forests are close to municipal watersheds, so there are opportunities for water quality credits associated with them, and this is certainly an area we will be exploring in future acquisitions.”

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here

    Cargill Demands Answers from Indonesian Palm Oil Supplier


    2010 - 04.07

    Cargill has become the latest US multinational food company to demand answers from the Indonesian palm oil giant Sinar Mas regarding claims that it is destroying forests rich in carbon and wildlife.

    In recent months in response to protests by Greenpeace image conscious buyers Unilever and Nestle have dropped the company as a supplier. Cargill is more cautious or is at least willing to give Sinar Mas the benefit of the doubt and have asked them to respond to Greenpeace’s allegations. They have also asked the industrial body Roundtable on Sustainable Palm Oil (RSPO) to investigate these claims.

    “Cargill is keenly aware about the allegations made in December 2009 by Greenpeace about illegal forest clearance and the Indonesian palm oil company, Sinar Mas,” it said on its website.

    “When we became aware of the Greenpeace report we contacted Sinar Mas’s senior management and we have communicated to them that we are looking to them to address the issues in the Greenpeace report. Additionally, we urged the RSPO board to review this issue. We are pleased the RSPO Board has instructed the RSPO secretariat to get a response from Sinar Mas to the allegations in the Greenpeace report.”

    Answers are expected by the company at the end of this month.

    “If the RSPO validates the allegations of improper land conversion or illegal planting in deep peat land as alleged in the Greenpeace report and Sinar Mas does not take corrective action, we will delist them as a supplier,” it added.

    Daud Dharsono, Sinar Mas Agro Resources and Technology (SMART) president director said the company was in the process of verifying Greenpeace’s report.

    “We are in touch with Cargill to assure them that we do not develop on high carbon stock and high conservation value areas,” he said.

    Indonesia is considered the third largest emitter of greenhouse gas in the world and that isn’t down to car exhaust fumes but due to the rapid clearing of vast tracts of Indonesian forests for palm oil plantations.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Forestry please click here