Sales of US produced biodiesel, which is made mostly from soybean oil, tripled in 2006 and were expected to be even higher in 2007.

Sky-high crude oil prices are both a blessing and a curse for US farmers, who have seen a sharp jump in their energy-based input costs but also higher revenues from crops used for renewable fuel production.
US crude oil futures rallied to a record high above $100 a barrel recently, helping to send Chicago Board of Trade (CBT) corn and soybean prices higher because of their increasing use for making alternative fuels, Enn.com reported.
“Prior to the ethanol and biodiesel build-out it could only be a negative for them through higher input costs. But today they get some gain as well because $100 a barrel oil implies much higher gasoline and ethanol prices,“ said Michael Swanson, an agricultural economist at Wells Fargo.
“The corn market has rallied on the prospect of that ethanol demand being solid going forward. Every bushel of corn, whether it goes into ethanol or not, is getting that premium tacked onto it,“ he said.
US ethanol production capacity was estimated at more than 7.4 billion gallons per year, up nearly 40 percent from a year earlier, according to the Renewable Fuels Association.
Sales of US produced biodiesel, which is made mostly from soybean oil, tripled in 2006 and were expected to be even higher in 2007, according to the National Biodiesel Board.
Spot CBOT corn futures hit an 11-year high of $4.69 a bushel this week, up from around $2.50 a bushel in the autumn of 2006. CBOT soybean futures nearly doubled from a year ago, rising to an all-time high of $12.93.
But as crop prices have soared, so have the costs of many essential energy-based farm inputs such as fertilizer, weed, pest-control chemicals, and fuel for running machinery and drying grain.
Those increased costs have chewed away a large share of farmer profits, so analysts are divided on whether farmers are better off in a $100-a-barrel-oil world.
“When you have high prices, you also have higher risk so your margin of error shrinks. Your risk goes up as prices and volatility go up in energy,“ said Don Roose, president of US Commodities in Des Moines, Iowa.
“Hopefully we don’t get a disconnect sometime between energy and grain, which we have seen in Brazil and the sugar areas,“ he said, citing South America’s largest producer of ethanol made mostly from sugar cane.
Other experts said the benefits of higher oil prices may slightly outweigh the drawbacks because less than half of total farm operating costs are tied to energy prices while the rest are non-energy costs such as labor, machinery and land.
“It’s going to hit them on the fertilizer and the diesel side, but that’s only part of it. The fact that they get some benefit from the upside and only a portion of their cost structure is hit by energy, it’s still a net win for them,“ Swanson said.
“They are probably one of the most energy intensive groups out there as an industry, but we certainly would not have nearly $5 a bushel corn on the Chicago Board of Trade if we didn’t have a huge growth market for ethanol.“

India and China have well-established nuclear programs which they want to expand, and possibly even cooperate on.

The warm welcome given by Chinese and Indian diplomats to the recent agreement by the two countries to strengthen economic, military and business links did not specifically mention one key issue--access to power supplies.
Fifteen years ago, China didn’t import any oil at all.
Yet by 2030, it will be importing the same as US currently imports daily. And India’s daily oil imports will have overtaken the European Union and Japan.
Those figures are from the International Energy Agency (IEA), which advises governments around the world on energy issues, BBC reported.
“The oil markets will get tighter and tighter,“ says Fatih Birol, the IEA’s chief economist.
He believes the next decade will be critical in addressing the security and environmental challenges this thirst for fuel poses.
For both Beijing and Delhi, the race for oil as well as gas has become a key concern. Most analysts agree China has been quicker off the mark, securing deals in Latin America, Central Asia and Africa.
China is generally less inhibited about who it does business with.
“I think China is already ahead in a sense in their strategic positioning in securing energy supply, ahead of India,“ according to Shirong Chen, the BBC’s China editor.
But China’s needs are greater because their economy is based on manufacturing, while India’s is more service orientated.
China is generally less inhibited about who it does business with, whether it is Burma or Venezuela.
“Being able to collaborate with regimes which are unfriendly to the West is something China has a great advantage in,“ says Lawrence Saez, senior lecturer at the School of Oriental and African Studies in London.
“India--even though it has a very independent foreign policy--is slightly more responsive to the democratic aspirations of some of these countries.“
India’s more open political system can also slow down decision-making. Attempts to finalize a nuclear fuel deal with the US have been bogged down in lengthy arguments between the government and its Communist allies in parliament.
What the International Energy Agency wants to see is greater efficiency in the use of energy, and more use of nuclear power and renewable sources of energy.
India’s electricity management and distribution network are widely viewed as in need of reform. Every year, a sizeable chunk of India’s power is simply lost or stolen.
Both countries have growing populations and need more power.
More efficient use of coal would be another option as both China and India are heavily dependent on coal to generate electricity. And last year China even started importing it, despite having large reserves of its own.
China is eager to exploit clean coal technology, but Western companies are not that keen to part with it for hard-nosed commercial reasons.
“What if China got all this clean coal technology and their economy would develop even faster? What would happen to the big economies like the USA and India?“ says the BBC’s China editor Shirong Chen.
Nuclear power is another option and both India and China have well-established nuclear programs which they want to expand, and possibly even co-operate on.
But it is a sensitive subject, touching on concerns about technology transfer, proliferation and global security as well as safety issues.
This week, Australia announced it would not be selling uranium to India because it has not signed up to the nuclear Non-Proliferation Treaty.
The authorities are taking a tougher line on illegal polluters.
Even in China, with its more advanced nuclear power program, nuclear power is not expected to make up much more than 4 percent of the energy mix by 2020.
Wind, biomass, solar and hydro-electric sources may turn out to be more promising.
China wants 15 percent of its energy from renewable sources by 2020, and India, which is aiming for 10 percent by 2012, has become a world leader in wind farms.
Salman Zaheer of the World Bank says India could also do much more to exploit hydro-electric power.
“In North America, 80 percent of their hydro-electric power has been exploited, in Europe it is 60-70 percent. In India, it is just 10 percent.“
But as the rest of the world grapples with the impact of China and India on the world’s energy supplies, Lawrence Saez of the School of Oriental and African Studies believes the immediate priority for Beijing and Delhi is to pursue growth.
“India and China do not want to be a laboratory for the West. They see that the West has developed as result of energy use. And they are quite aware that to curtail that would hurt them economically.“
And that means that for at least the next couple of decades, the race to secure oil, gas and coal will continue.

Environmental measures are adding about 60 euros to the average household energy bill this year, the market watchdog said, as EDF Energy (an energy company that provides gas and electricity to homes throughout the United Kingdom) became the second leading supplier to raise prices.
Ofgem, which regulates gas and electricity markets, said the combined effect of the European Union’s emissions trading scheme (ETS), the renewables obligation (RO) for subsidizing green electricity such as wind power, and the new carbon emissions reduction target (CERT), the energy efficiency program that comes into effect in April, would add about 6 percent to the average bill, FT com reported.
EDF announced price rises of 12.9 percent for gas and 7.9 percent for electricity, to take effect from January 18, following RWE Npower’s average increases of 17.2 percent for gas and 12.7 percent for electricity earlier in the month.
The rest of the “big six“ suppliers--British Gas, Scottish and Southern Energy, Eon and Scottish Power--are expected to follow suit soon.
The main factor driving up retail prices is the rise in wholesale prices. EDF said gas had risen by 117 percent and electricity by 90 percent since last February.
However, prices are also being driven up by regulatory changes. The cost that the transmission and distribution companies are allowed to charge has risen by an estimated 4 euros per customer per year for electricity and 32 euros per customer per year for gas, according to EDF, which benefits from the increase because it owns distribution companies.
On top of that are the environmental costs. Ofgem calculated that the CERT would add 20 euros a year to the average bill this year, the RO about 10 euros and the emissions trading scheme about 31 euros.
The cost of the EU’s ETS has risen because of the move at the start of the year from phase one of the scheme, in which emissions permits were by the end almost worthless, to phase two, in which they are worth about 17.50 euros per ton of carbon dioxide.
Heren Energy, the research firm, has estimated that such increase has added more than 11 euros per megawatt hour, or almost 17 percent, to the wholesale price of electricity.
Eva Eisenschimmel, EDF’s chief operating officer for its supply business, said in a statement, “Despite soaring wholesale energy prices, higher distribution costs and increased environmental obligations, we have been able to substantially limit the impact on our customers.“
Keith Munday, commercial director of BizzEnergy, a smaller electricity supplier that sells to businesses and hopes to break into the residential market for larger homes this year, said there was now a conflict between the government’s ambition to have a market supplying energy at the lowest possible cost, and its environmental policy.
“The government likes high energy prices because they reduce demand,“ he said. “High energy prices make consumers think about how they use their power.“

General Electric announced plans to double its investments in renewable energies to $6 billion by 2010 in the latest sign of a push by big companies to capitalize on concerns over global warming and pollution.
The financial arm of the US conglomerate believes that within two years alternative sources such as wind and solar power will account for almost a quarter of its total investments in energy and water, up from 10 per cent in 2006, FT.com reported.
The move by GE, which has been at the forefront of corporate America’s efforts to respond to environmental fears, underlines the desire by traditional industrial companies to gain critical mass in “greener industries“.
GE has already invested more than $3 billion buying stakes in renewable energy plants across the world. But senior executives, led by chairman and chief executive Jeffrey Immelt, believe the
sector is poised for strong growth in the near future.
The market for renewable energy is worth an estimated $60 billion a year and is expected to expand rapidly as governments and utilities strive to reduce their dependence on fossil fuels and turn to cleaner energy.
Alex Urquhart, chief executive of GE’s energy financial services unit, which has total assets of more than $16 billion, told the Financial Times that renewable energy was the division’s fastest growing business.
“We are really attracted by the size and potential of this market,“ Mr Urquhart said. “This sector is proving to offer a lot more opportunities than we first thought.“
Strong demand for renewable energy funding prompted GE to increase last year’s target of $4 billion in investments by 2010 to $6 billion, he added.
GE’s most recent renewable energy deal was a $300 million investment in a 600-megawatt portfolio of wind farms in Oregon, Minnesota, Illinois and Texas owned by a subsidiary of EDP Energias de Portugal, the Portuguese utility.
GE executives say the company’s top credit rating and vast cash resources put it in a strong position to invest in, and lend to, capital-intensive industries such as energy and water.
The drive to invest in renewable energy is part of Mr Immelt’s strategy of increasing GE’s exposure to environmentally friendly industries with high growth prospects.
The initiative, called “ecomagination“, includes pledges to grow revenues from “green“ products to $20 billion and increase research spending on cleaner technologies to $1.5 billion by 2010.