Renewable Energy and World population growth: Economic Development vs Food Crisis

September | October 2008 N.ยบ 12

ISSN 1646-0030 | Quarterly | 5 euros

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Renewable Energy and World population growth: Economic Development vs Food Crisis International opinion from: FAO, World Food Programme, World Bank, IMF, EU nuclear, renewable and energy effIciency - Interviews: Pedro Sampaio Nunes and Nuno Ribeiro da Silva Global Green: Portuguese Company awarded with the European Biomass Industry Association Award Ocean Wave Energy: Portuguese Future - Frank Neumann, Wave Energy Centre

Summary

4 Editorial

J. Delgado Domingos

Energy and Food Production around world 6 Maria Kadlecikova 8 Manuel Aranda da Silva 9 Donald O. Mitchell 10 Felix Fisher

12 Ferran Tarradellas

20 Pedro Sampaio Nunes

14 Michael Hopkins

22 Nuno Ribeiro da Silva

33 Frank Neumann

17 Energy EffIcincyKey References

25 Paulo Caetano

34 Route

Energy and Challenges view’s from portugal

31 REPORT- Global Green

26 Francisco Ferreia 29 Cascais Energy Agency 30 Álvaro Brandão Pinto

18 Agostinho Miguel and João Saraiva

Im))pactus is part of Sustentare - A portuguese based CSR consultancy company, with an independent editorial board and totally open to civil society participation.

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External participation in this edition José Delgado Domingos, Maria Kadlecikova, Donald O. Mitchell, Manuel Aranda da Silva, Felix Fisher, Ferran Tarradellas, Michael Hopkins, Nuno Ribeiro da Silva, Francisco Ferreira, Brandão Pinto, Pedro Sampaio Nunes, Frank Neumann, Paulo Caetano, Ashok Hansraj, Agostinho Miguel, João Saraiva, João Dinis.

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Editorial

J. Delgado Domingos

| Im))pactus September | October 2008

Professor and Researcher at IST, Technical University of Lisbon

Energy and Food Crisis

4 Within the sphere of public debates on the accession to the EEC, the magazine “Vida Rural” [1] has invited me, in 1986, to write an article that was published under the heading “Energy, Agriculture and the EEC”, in which I warned against the consequences of not evaluating properly the implications of cost and availability of energy in the Portuguese agriculture conversion to the paradigms of the CAP in place at the time. The issues “Energy, Food Production and Food System” had already been analysed by me in 1978 and, after that, many other works have followed at the Instituto Superior Técnico [2] on the Portuguese situation. If I mention this fact it is just to underpin that the current food crisis (and the ones that will follow…) is simply a consequence of the way the food system has been structured in the developed countries. The world population is presently seven times larger than two centuries ago and it is still increasing. This was made possible by the rising use of fossil fuels, particularly petroleum, but this success has made it critically dependant of its cost. The generalisation of this system of food production and distribution to the emerging countries, coupled with the world population increase is physically incompatible, over time, with the available resources especially petroleum and natural gas.

In a straightforward and generic way, one can say that this type of structure leads to an annual consumption of 800Kg of petroleum (or the equivalent energy) to feed each inhabitant. As a primary energy source, petroleum might be substituted by different energy sources. However, petroleum is also an essential raw material for the production of fertilisers, herbicides, fungicides and many other products that are vital for the food system (industrial) in its present layout, in which there are broadly three basic sectors: farming, food processing and transport, and final consumption.

In farming, the most important direct and indirect consumptions derive from the upstream production of fertilisers but also, and

generally to a lesser extent, from agricultural machinery (including pumping equipment). Yet, together they account for the less significant part of the total cost in energy expenditure to deliver food to the final consumer. On an indicative basis, recent values in Portugal at the Lezíria do Tejo [3] range from 0,14 Tep/ton (sunflower) to 0,08 Tep/ton (corn). Bearing in mind the conversion rates in animal proteins, the meat tep/ton are much higher (and they differ significantly according to the considered animal). An animal protein diet is therefore much more vulnerable to energy cost than a vegetarian diet. The way the petroleum price increase reflects itself in the overall costs is subject to considerable distortions when compared to the purely physical factors, due to tax and subsidies policies applicable in different countries. However, it should be noticed that the effect of energy cost increase has different time gaps according to each sector and it only reflects the direct costs, in the short term. For instance, the indirect effect of fertilisers will only be felt in the following crop and the effect of machinery only when it will be replaced which occurs, in average, a couple of years later.

The fact that the less significant part of the total energy cost comes from farming, emphasizes the other parts, namely transport, a concern that is common to other activities and derives from a basic problem of land use planning and localisation of economic activities.

Now that the direct and indirect influence of petroleum price in the cost of food products is clarified, it is necessary to bear in mind the effect of other explanatory factors of the present crisis, some are merely conjunctural and others are structural. In the present crisis there are certainly speculative movements that exploit and amplify the market imbalance. In terms of market, there has been in recent years an accentuated demand for cereals and products for animal feed, triggered by a diet change of many million consumers

| Editorial

“The production of biofuels, in itself, can hardly be justifiable merely based on energy or environmental aspects, except in the case of waste recovery and even then one would have to consider that its organic matter will not return to the soil, where it would contribute to its fertilisation. ”

5 in emergent economies, associated to an increase of the standard of living, especially in China, which has lead to a rise in meat consumption. This rise was not followed by a corresponding increase in production and has lead to a reduction of the world cereal stocks that was made worse by falls in production due to unfavourable weather conditions. In this context, the increasing diversion of cereals to the production of biofuels was cleanly pointed as the main reason for the present situation, but without a convincing justification, except in very exceptional cases.

The production of biofuels, in itself, can hardly be justifiable merely based on energy or environmental aspects, except in the case of waste recovery and even then one would have to consider that its organic matter will not return to the soil, where it would contribute to its fertilisation. As a replacement fuel for transport, it will always have a marginal global contribution. In most cases, its economic sustainability is artificial, since it depends completely on direct or indirect tax subsidies. In addition, if there is an increase of its production, it will inevitable compete, as it already happens, for land that is needed for food production. Tax and subsidies policies, such as the former CAP, can lead to biofuels development in order to dispose of the agricultural production surpluses, but such an economic irrationality, by political motives, is unsustainable over time.

The sudden political promotion of biofuels, at least at European level, as a result of the petroleum price increase and external EU energy dependence, is a somewhat analogous pretext to the promotion of nuclear energy. The nonsense of this pretext derives from the fact that nuclear energy is used only to produce electricity, while the use of petroleum to produce electricity is just marginal.

At European and world level (as well as in Portugal), coal is the basis

for the production of electricity. As the existing coal reserves are still massive and geographically disperse, the supply security and the existing reserves are a non-problem, so the invoked pretexts are unconvincing, despite the crusade against coal inspired by the nearly religion of climate change. More accurately, the central issue is not the energy offer but instead the demand, including food type and geographic origin. But addressing this issue is against the existing culture and established habits. Fortunately there are still fossil fuel resources in sufficient amount to be possible to make a transition to new ways of economic and social organization which preserve and improve the best that the present civilization has brought us.

The current demand for energy is not sustainable and the price increase is a very serious warning. After the first and second oil shocks warnings, this will most likely be the last warning before the physical depletion of fuel reserves. That is why it is preferable to face, immediately and seriously, this energy problem in its multiple aspects, instead of creating illusions through technological mirages or conditioning the options due to hypothetical cataclysms.

by José Delagado Domingos.

[1] Free translation – “Rural Life”.

[2] Many of the position papers can be found at http://jddomingos.ist.utl.pt [3] Tiago Domingos et al“Avaliação da sustentabilidade da agricultura de regadio da lezíria do Tejo e vale do Sorraia”, 2008. It should be noticed that these are, for sure, the best results in Portuguese agriculture.

energy and food production - around world - fao

Maria Kadlecikova

| Im))pactus September | October 2008

FAO Regional Representative for Europe and Central Asia

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Im))pactus: 1. Corn plantations for biofuels. Where will bioenergy industry and agreed that governments could use bioenergy this fever go to? And what are its dangers? as a positive force for rural development Maria Kadlecikova: Bioenergy is the dominant source of energy for

most of the world’s population who are living in extreme poverty and use this energy mainly for cooking. They have limited access to other forms of energy such as electricity or liquid fuels. These traditional uses of biomass for energy use, in particular the residues of agriculture and forestry, are linked to negative impacts on health.

“It was the first time that experts in bioenergy, food security and the environment came together to discuss the important linkages between those sectors,” said Alexander Müller, Head of FAO’s Natural Resources Management and Environment Department, commenting this meeting.

A different kind of bioenergy is now taking prominence based on cash crops and plantations and using technologically advanced processing of biomass into biofuels. Bioenergy is seen as a renewable source of energy, as well as providing income and employment opportunities for rural populations. Bioenergy has emerged as a key factor in both development and environment.

While there is legitimate concern among some groups that bioenergy could compromise food security and cause environmental damage, it can also be an important tool for improving the well-being of rural people if governments take into account environmental and food security concerns. In food security terms, bioenergy only makes sense if we know where the food-insecure populations are located and what they need to improve their livelihoods. Environmentally, we must make sure that both large- and small-scale producers of bioenergy fully take into account both the negative and positive impacts.

There is a key role for governments to play in setting standards of performance. International organizations such as FAO can also have a major role in providing a neutral forum and policy support.

At the same time, it has become apparent that the sustainable use of bioenergy requires balancing many factors, including the possible competition between food security and energy security, the competing uses of water resources, effects on rural development, agricultural markets and food prices, as well as the impacts on the environment, biodiversity and others. This has to be done at the local, the national and the international levels, based on proper information and understanding. Knowledge management, mobilization and implementation at country level are central pillars of such an approach.

We need an international commitment to make sure that food security is not impaired and that natural resources are used sustainably.

The FAO High-Level Conference and other high-level meetings confirmed that the international community is considering the recessive corn use for biofuels as a potential short-term risk. Some countries even commenced with more precise balancing of their stocks which may result in no corn price increase in this harvest season.

I.: 3. The rising food prices will affect the millennium goals, said Ban Ki Moon. Do you agree?

M.K.: We have to admit that the negative impacts are imperative in

FAO’s International Bioenergy Platform as well as its support to the Global Bioenergy Partnership for which it hosts the secretariat and the involvement in the Bioenergy Wiki are some of the mechanism put in place to ensure that that key partners, stakeholders and interest groups work to ensure that food security, energy security, rural development and mitigation of climate change are not mutually exclusive targets.

Agricultural commodity prices rose significantly in 2006 and continued to increase even more sharply in 2007. Extreme price events are not rare occurrences in agricultural markets, although periods of high prices tend to be of shorter duration than low price phases.

I.: 2. What are the limits and the goals to set concerning cereal plantation for biofuel? And who should set those limits? Supranational organizations, as the World Bank or G8?

M.K.: Top international experts met in Rome in April to consider the environmental and food security impact of the rapidly-expanding

short term. It is hard to estimate what will happen next. But we have to be sure that international organizations and governments have the tools to handle this challenge in the medium and long term.

What distinguishes the current state of agricultural markets is the concurrence of sharp price rises for nearly all major food and feed commodities. As a result, high international food crop prices have rippled through the food supply/value chain, contributing to increases in the retail prices for such basic foods as bread or pasta, meat and milk. This price boom has also been accompanied by much higher price volatility than in the past, especially in the cereals and oilseeds sectors, highlighting greater uncertainty in markets.

The factors which led to a combination of lower global supply,

Substantial increases in fuel and food prices are bound to have a negative impact on the import bills of net food and fuel importing countries, many of which are also poor; at present, 82 countries are included in the list of Low Income Food Deficit Countries (LIFDCs).

In order to limit the impact of rising cereal prices on domestic food consumption, governments from both cereal importing and exporting countries have introduced a variety of policy measures. (E.g. the European Union has removed the compulsory set-aside requirement, the Russian Federation has raised wheat export duties, Ukraine consideres to add wheat and rhy to the list of commodities under state price control, in Mongolia, the Government has removed valueadded tax from imported wheat and flour).

In medium and long term the higher prices also provide an opportunity for re-launching agriculture in developing countries through long-term public investments and programmes which will, in turn, catalyze private sector investments in response to higher gross returns that may or may not translate into higher profits. FAO is working with several countries to provide support on both fronts; the economic implications of higher food prices at the household level, and the fact that current high returns for investment in agriculture provide an opportunity to strengthen the sector.

FAO will continue to support production in response to food crises and higher food prices, especially since, in LIFDCs. The Organization is also working with countries to further develop their financial and risk management products linked to the agricultural sector. In addition to long-term sustainable agriculture strategy design, this includes the establishment of closer links between more efficient financial and insurance instruments for the agricultural sector, as well as commodity exchanges and weather-indexed risk management tools.

I.: 4. By 2030 World population will grow so much that will be needed to raise in 50% the food production. How can we avoid a deeper World crisis?

M.K.: We have to use all possible and accessible tools. We can coop

the challenges by appropriate investment, sustainable production systems, appropriate risk management, by producing resistant species and breeds, by using renewable energy and appropriate environment management methods, by considering traditional production methods and traditional products, by adoption to the climate change, by international cooperation, solidarity and understanding, and finally by adoption of trade reforms. The declaration of the HighLevel Conference also reiterated that food should not be used as an instrument for political and economic pressure. It has to be also mentioned that so far we are not using effectively the land resources at our disposal, particularly in Kazakhstan, Russian Federation and Ukraine. Also in these countries as well as in Moldova the average cereals yields could be significantly increased by using advanced technologies and integrated pest management.

I.: 5. Is it correct to say that the use of cultures to produce biofuel will be worst to deforestation and endanger the food security?

M.K.: If sustainable management of natural resources would be a key factor of the development then the negative impacts would be avoidable. It is essential to address the challenges and opportunities posed by biofuels, in view of the world’s food security, energy and

sustainable development needs. We are convinced that in-depth studies are necessary to ensure that production and use of biofuels is sustainable in accordance with the three pillars of sustainable development and takes into account the need to achieve and maintain global food security. We are further convinced of the desirability of exchanging experiences on biofuels technologies, norms and regulations. We call upon relevant intergovernmental organizations, including FAO, within their mandates and areas of expertise, with the involvement of national governments, partnerships, the private sector, and civil society, to foster a coherent, effective and results-oriented international dialogue on biofuels in the context of food security and sustainable development needs.

However, we have to carefully study the impact of the production and use of bioenergy on natural resources especially the soil degradation.

I.: 6. What was concluded in FAO conference on food crisis that ended June the 5th?

M.K.: The most important outcome is that participants reaffirmed

the conclusions of the World Food Summit in 1996, which adopted the Rome Declaration on World Food Security and the World Food Summit Plan of Action, and the objective, confirmed by the World Food Summit: five years later, of achieving food security for all through an ongoing effort to eradicate hunger in all countries, with an immediate view to reducing by half the number of undernourished people by no later than 2015, as well as our commitment to achieving the Millennium Development Goals (MDGs).

They agreed to address the challenges of bioenergy and climate change, and the current situation of soaring food prices that is having adverse impacts on food security, particularly in developing countries and countries in transition, all the more because the indications are that food prices will remain high in the years to come.

They also agreed, that the international community needs to take urgent and coordinated action to combat the negative impacts of soaring food prices on the world’s most vulnerable countries and populations. We are further convinced that actions by national governments, with the support of the international community, are required in the short, medium- and long-term, to meet global and household food security needs. They called upon all donors and the United Nations System to increase their assistance for developing countries, in particular least developed countries and those that are most negatively affected by high food prices.

Development partners had been invited to participate in and contribute to international and regional initiatives on soaring food prices and, in particular, under the FAO initiative launched on 17 December 2007, in support of country-led measures.

Members of WTO reaffirmed their commitment to the rapid and successful conclusion of the WTO Doha Development Agenda and reiterate their willingness to reach comprehensive and ambitious results that would be conducive to improving food security in developing countries.

The declaration urges national governments, all financial institutions, donors and the entire international community to fully embrace a people-centred policy framework supportive of the poor in rural, peri-urban and urban areas and people’s livelihoods in developing countries, and to increase investment in agriculture.

In this respect FAO launched its Initiative on Soaring Food Prices in frame of which 54 countries are supported with distribution of seeds and fertilizers. Within the next phase of medium term activities, attention would be given to institutional capacity building for food production, marketing and increased trade capacities.

by Maria Kadlecikova, FAO Regional Representative for Europe and Central Asia.

| Energy and food production - around world

increased demand, and sharply rising prices emanated from both the supply and demand sides. They included weather-related production shortfalls, a gradual but continuous reduction in world cereal stocks levels since the mid-1990s (about 3.4 percent per annum), increasing fuel costs affecting both production, transport and processing of agricultural commodities, and a changing structure of demand.

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Energy and food production key issues - Around World - WFP be expected an increase in the standard of living amongst the poorer populations, which will lead to a growth of consumption and food products demand. The increase in agricultural productivity of 3% per year, during the 70’s, has reduced gradually and presently it does not surpass 1% in the most developed countries and large producers of cereals. Only the farming area enlargement or the productivity increase in countries where it is still very low, in particular Africa and some of the ex-Soviet Union including Russia may serve as a response to the increasing need of food products.

Manuel Aranda da Silva

| Im))pactus September | October 2008

WFP Senior Adviser, Former Minister in the Mozambican Government

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One of the necessary responses is the massive increase in agronomic research investment, together with a significant investment in infrastructures for agricultural production in those countries with a considerable potential for increasing their agricultural potential. This implies urgent adjustments in the development aid policies to privilege agricultural investments and to set up more favourable conditions in these countries for private investment to produce food products. Even if these measures are implemented urgently, the effects of the response from the production viewpoint will take some time to be felt in international markets and prices and will have a deep impact only in the medium and long term.

The price of Food Products – A short-term issue or a problem of global consequences?

Meanwhile, several million people face the risk of falling into extreme poverty...

The dramatic price increase of food products in the last 12 months has created a threat to the worldwide food safety and a threat to socioeconomic stability in many countries. Unless there is a global and multifaceted answer, more than 100 million people throughout every continent will be at risk of not getting enough food to survive. This situation affects millions amongst the poorest urban population in particular in economically weaker countries.

This situation affects also dozens of millions of inhabitants in rural areas where 75% of the world’s poorest population lives. The price increase of food products together with the oil price increase is leading to a major inflationary pressure in all countries and also to unbalances in the balance of payments of the poorest countries, those importing food products and oil. Although the prices of some food products have recently stabilized at a high level, in the medium-term the oil cost, the climate change and the degradation of natural resources will keep the prices of food products high, for a long period of time.

At least 135 million people will suffer dramatically with the price increase and will enter the category of those living in extreme poverty, which is defined as a person who lives with less than 1 dollar a day. The people who integrate this category spend more than 50% of their income in food and are extremely vulnerable to variations in food prices. Immediate measures to stabilize the situation and reduce the impact of price increases in the most vulnerable segments of the population are required and urgent. If these measures are not implemented urgently it may lead to a widespread turmoil in many countries which may lead to serious turbulence in these countries’ economic growth and subsequent political and social instability. This instability may lead to new conflicts and tensions and, thus, affect the peace and security of many regions, therefore affecting each and every country in the world.

The dramatic price increase of food products is not the consequence of an immediate climatic shock or emergency. During the last years, there was an increase in the demand of these products due to a cumulative effect of several variables, such as: population growth, improved standards of living in countries such as China or India and subsequent diet diversification and increase in the consumption of meat and proteins, gradual reduction of worldwide stocks, growing use of cereals to produce fuels and the productivity stagnation of agricultural production in view of the investment reduction in agricultural research. More recently the price increase of oil products had a huge impact in the price of fertilizers, fuel and other critical products for the production of food products, worsening the situation. This impact has not yet reached its peak and it restrains the expectable fast answer of a production increase by producers as a response to the producer price increase. FAO estimates that in 2008 alone, the world will have spend US $ 1,035 in food products imports, that is, more US $ 215 billion than it occurred in 2007.

The price increase of food products entails the risk of political instability in some countries where demonstrations and disorder have already taken place in large scale. This risk is particularly high in post-conflict countries with frail democracies, since their political and social institutions are frail and will have financial difficulties to react quickly with measures to calm down the social panic resulting from the fast rising prices. Other affected countries are those already facing conflicts, drought or other disasters in feeble humanitarian situations. Somalia and Ethiopia are that type of country where long-lasting conflicts (Somalia) or consecutive droughts (Ethiopia) have significantly reduced the country’s ability to feed its population. Several UN reports demonstrate that unless food aid doubles in the next few months we will witness starvation in some of these countries.

The implementation of export restriction measures or the establishment of new export taxes for food products, by countries that traditionally export cereals and other food products have increased the already existing difficulties and generated panic in international trade markets of food products. This fact has lead to speculation in cereal markets, thus increasing the difficulties faced by frailer countries in having access to food products.

How to face the problem of price increase?

There are no magical solutions for this problem because, as we previously clarified, it is the result of a combination of complex problems that have build up and lead to this crisis. Only a fast increase in food production and subsequent offer in international markets may lead to price stabilization. As we have seen, the population growth will continue in the next decades – and only around 2050 will it stabilize at a level of approximately 9 thousand billion inhabitants, approximately 40% more than present. It should also

What are the short-term measures to stabilize the situation and reduce the consequences in frailer countries?

The immediate response to the crisis involves a set of measures. The combination of these measures might create the necessary political space to implement the previously mentioned long-term solutions. The required measures are: 1) To increase the food aid to the population segments at risk of falling into a situation of starvation, in countries where there is already an extreme humanitarian crisis situation, such as Somalia, Afghanistan, Ethiopia, Haiti, etc.. To achieve this objective it is necessary to double the food aid during 2008 and to maintain that level in the next few years; 2) To introduce or extend social protection services aimed at the more vulnerable segments of the population. Unlike more developed countries, social welfare services are quite underdeveloped in the affected countries.

This is the moment to introduce a minimum of social welfare programs that firstly should be aimed at children under the age of 2 and their mothers but they can also be extended to schoolchildren by using school canteens, especially in primary schools. These measures may include nutritional support programs, financial transfers, school canteens and programs for employment creation with intensive labor (planting trees, waste cleaning, rehabilitation of degraded school infrastructures, etc.). The purpose of these programs should be the protection of the most vulnerable segments of the population and by using them it is possible to reduce global subsidies measures that do not discriminate between those who need it most and those who do not need it, and represent a huge cost for the State and cannot be maintained for a long time except taking the risk of unbalancing the macroeconomic stability; 3) To promote agricultural production amongst small farmers from the most affected areas, through subsidies to obtain improved seeds, to gain access to fertilizers and to other agricultural tools; 4) To revise taxes impairing the trade of food agricultural products; 5) To make available to the poorest countries – the biggest importers of oil and food products – concessional financial means to support their balance of payments and imports of food products; 6) To restrict the use of cereals in the production of biofuels.

This set of urgent measures can be financed by governments of the affected countries with the support of those countries now benefiting from the sharp rise of prices, which are essentially the oil-producing countries namely from the Middle-East and the large exporters of food products namely the European Union and the United States. Unless there is a worldwide concerted action to help stabilize the situation, there is a risk we might be entering a great instability decade of unpredictable consequences for the worldwide peace.

by Manuel Aranda da Silva, WFP Senior Adviser, Former Minister in the Mozambican Government.

Energy and food production - Around World - world bank

Soaring prices have been blamed on lower agricultural production, weather shocks, more meat consumption, and shifts to biofuel crops. Wheat prices are up 120%, rice prices are up 75% and poor families spend up to 80% of their budget on food.

The World Bank counted 33 countries where social violent movements are predicted due to the raise of food prices, this was

‘’based on a survey of economists working on these countries or in these countries’’, told us Mr. Mitchell. He expressed concern over the relation between the search for profit and world hunger: ‘’The increase of food crops in the USA and in other countries

is a concern especially when those countries are using surplus land which is not available for biofuel production and when there is a direct competition with food crops, this is definitely a concern’’.

High food prices are a matter of daily struggle for more than 2 billion people. High prices threaten to increase malnutrition, already an underlying cause of death in over 3.5 million children a year. An estimated 100 million people have fallen into poverty in the last 2 years and prices are expected to stay high through 2015.

Donald O. Mitchell

World Bank Lead Economist at the Development Economics Department

In Africa…

21 of 36 countries in a food security crisis are in SubSaharan Africa, according to FAO. The region imports 45% of its wheat and 84% of its rice.West Africa, the Horn of Africa, and fragile states are especially vulnerable; Weather-related shocks and civil strife worsen the impact in some countries. and Asia…

Most countries in South Asia are net food importers and have suffered severe trade shocks. A 2 kg bag of rice now costs half the daily income of a poor family in Bangladesh and in Indonesia, a 10% rise in rice prices means 2 million more people will be plunged into poverty, according to a recent assessment.

“We certainly try to respond to the true needs, we may not be able to help in all cases as much as we would like but we certainly try to respond to the need of the poor in all countries and we are very active in many countries that do not have policies which might be favored by some countries but we try to be supportive in as many cases as we can. So I don’t think we‘re trying to impose a strong political judgment in responding to the needs of the poor.”

Mr. Mitchell insisted that the World Bank is ‘’very actively involved

in analyzing global climate change and the impacts of that, and we are prepared to assist countries in adjusting to those kind of changes. The rising food prices is a very important and serious issue and its created hardship for many poor people who spend as much of half of their incomes on food and the bank as been very active an involved trying to design policies ‘’The World Bank has been extremely responsive; we’re trying to help countries to deal with rising food prices and also to help to help the poor and countries, it’s a very serious concern for the bank.’’ countries deal with the poor who have been affected by food crisis. I think we’ve been extremely responsive and we’ve done a great deal there’s always more that can be done and we’re not alone addressing this concerns, but the bank has been very sensitive to these issues and I don’t think it’s at all fair to say that we haven’t been responsive in addressing this issues. We have a number of activities which have been begun to try to help countries to deal with all aspects of the consequences of high food prices including providing assistance to the poor, helping countries with their financing food imports when necessary, contributing to improving the production of small holders in agriculture so that they can provide additional food in their own countries and benefit from the increase of

by Bruno Cachaço, Sustentare (www.sustentare.pt). The views expressed in this food prices when they’re producers and then also help the article are those of the author and do not necessarily represent those of the consumers to deal with the consequences of high food prices.’’ World Bank or WB Policy.

| Energy and food production - around world

“The World Bank has been extremely responsive; we’re trying to help countries to deal with rising food prices and also to help countries deal with the poor who have been affected by food crisis. ”

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energy and food production - key issues around the world - imf

Felix Fischer

| Im))pactus September | October 2008

Resident Representative of the International Monetary Fund in Maputo

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Is there a way out of the food and fuel crisis?

The International Monetary Fund (IMF) advises countries on their optimal macroeconomic policy response.

High food prices are today a serious humanitarian concern and threaten to derail progress toward the achievement of the Millennium Development Goals. They are also a source of macroeconomic challenges affecting budgets, trade balances and, of course, incomes almost everywhere in the world. Even if global food prices have decreased more recently from historically high levels, they have remained substantially above the levels of the last couple of years. The result is a devastating blow for the world’s poorest, who often spend more than half of their income on food.

The problem of high food prices is likely going to stay with us for some time to come. The high prices in part reflect robust demand growth that mirrors the emerging markets’ growth in per capita income. The world has been consuming more food than it has been producing for a few years, prices have been creeping up, and inventories are at historical lows. Moreover, the food price cycle is positively correlated with the one for oil. Fertilizer and transportation costs are affected by the oil price. And the oil price rose dramatically in a very short period of time, and even if it came down from historic highs, the oil price has remained high.

The rise in food prices has been exacerbated by reemerging trade restrictions. They are also partially a result of the recent production increase in biofuels. The IMF estimates that biofuels accounted for almost half the increase in consumption of major food crops in 2006-2007. Global food stocks are sufficient to feed everyone right now, but trade restrictions, hoarding by governments, price controls and other protectionist policies hinder the necessary food distribution across the globe and fuel the price increase. Yet, all countries rely on open trade to feed their populations. Completing the Doha round would thus play a critically helpful role in this regard, as it would reduce trade barriers and distortions and encourage agricultural trade. Agricultural liberalization would also lead to

more stable world commodity prices which induces longer term investment in food production.

In addition to the humanitarian concerns high food prices also caused macroeconomic challenges. The direct impact of higher food and fuel prices on the trade balances of countries in sub-Saharan Africa is expected to reach, on average, about 1 percent of GDP in 2008, while in some countries such as Malawi the negative impact is as high as 4 percent of GDP. The inflationary impact of recent food price increases is a particular concern in emerging and developing economies, where food price increases accounted for almost 70 percent of headline inflation in 2007. Policymakers need to decide how quickly to pass on higher food prices, how to prevent these price increases from leading to permanently higher inflation expectations, and how to deal with any resulting balance of payments (and fiscal) financing gaps.

The IMF has generally recommended that policy responses follow some general principles, starting with the most pressing: feed the hungry and reinforce social safety nets through transfers and subsidies targeted at the most vulnerable groups. Furthermore, the pass-through to higher domestic prices has ultimately to be allowed, although it can be gradual. First round increases in food and fuel prices need not call for countervailing monetary policy, but a firm policy response is needed to counter inflation expectations and prevent these first round increases in prices from translating into generalized inflation. Other recommended measures include investment in infrastructure and improved access to financing for agricultural investment. Finally, measures should also address the sources of the crisis. Distortion of global and local agricultural markets that discourage production in low-income countries; some biofuel policies; and high energy prices that drive up the cost of fertilizer and food transport.

| Energy and food production - around world

“The rise in food prices has been exacerbated by reemerging trade restrictions. They are also partially a result of the recent production increase in biofuels. ”

Food security is one of the key objectives of any government and IMF-recommended policies intend to support this objective.

However, countries should not aim at becoming self-sufficient in food. Rather, they should aim at producing where there comparative advantages are largest. Self-sufficiency policies are mostly inefficient and distortionary and consume scarce resources which could otherwise be spent on health and education. Food security can be achieved cheaper with insurance strategies, including strategies involving commodity futures trading.

Most countries are considering some sort of subsidies. Our advice has focused on eliminating generalized subsidies, such as fuel subsidies, as they tend to be regressive and expensive. Rather, policy responses should include targeted transfers that benefit essentially the poor. Most countries have immense social and economic needs and resources are scarce; it would be inappropriate to use them for supporting consumption of the rich.

The IMF, in cooperation with other development partners, has responded promptly to the crisis by providing policy advice, assessments of the balance-of-payments impact of the crisis, technical assistance and financial support. IMF-supported programs are designed to provide rapid financial support to address balance of payments needs and to provide fiscal space to meet government priority spending, while not jeopardizing long-term macroeconomic stability. As of end-July 2008 9 out of 18 most affected countries in Africa have already received additional financial assistance from the Fund, either in the form of augmented Poverty Reduction and Growth Facility (PRGF) access (Benin, Burkina Faso, the Central African Republic, Guinea, Madagascar and Malawi), or in the context of new arrangements (Burundi, Mali and Niger). Several other possible requests for augmentation or new arrangements, including under the Fund’s Exogenous Shocks Facility (ESF), are

under discussion. While keeping an eye towards the long-term sustainability of their policies authorities can thus spend on programs critical to keep people well-nourished.

However, additional fiscal space will be needed to enable compensating measures to be financed in a sustainable manner.

For many poor countries aid will be needed from the international community to meet these needs. Additional external financing can play an essential role, both by helping to finance critical imports and providing some breathing space for countries to implement the necessary adjustments, and to allow for higher expenditures in agriculture and social safety nets.

For a country like Mozambique which has vast unused fertile land, the current food crisis clearly also represents a window of opportunity to boost its agricultural production. Policies need to address farmers’ constraints to gear up production.

When choosing a mix of policy response and the pace of its implementation to respond to the current food and fuel crisis it is important to take into account development and poverty reduction implications. The international community must work together to ensure that these higher prices do not cause undue hardship anywhere in the world, but at the same time we need to ensure that markets respond by producing more food and getting to the people that need it.

by Felix Fischer, Resident Representative of the International Monetary Fund in Maputo, Mozambique. The views expressed in this article are those of the author and do not necessarily represent those of the IMF or IMF policy.

11

energy and foodproduction - key issues -european union

Ferran Tarradellas

| Im))pactus September | October 2008

European Commission - Energy Commissioner’s Andris Piebalgs Spokesman

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“The Commission wants to be sure that no damage is produced in food prices and the directive includes a monitoring system that will oblige the Commission to monitor every two years the impact of the biofuels policy, including food prices and social conditions of workers.”

Im))pactus: 1. Energy is the key issue at a global level at the moment. What’s the biggest problem: the need for more energy production or a better rationalization and savings in the way economic agents use energy?

Ferran Tarradellas: The world is facing a massive energy and

I.: 2. Renewables vs. nuclear. Bersluconi recently said Europe’s future may be nuclear power plants…. Which one should be the option to face problems associated to CO2 emissions?

F.T: Whilst not all European nations will opt for nuclear energy, it

The potential effects of Europe’s dependence on imported energy are serious. With oil prices approching $150 per barrel, the EU’s annual energy import bill may increase by €170 billion or an additional €350 out of the pocket of every EU citizen. Europe is particularly vulnerable to a price shock, and as the International Energy Agency states, “the ability and willingness of major oil and gas producers to step up investment in order to meet rising global demand are particularly uncertain.”

I.: 3. Green Energy from cereals constitutes nowadays one of the options for the production of energy with less CO2 emissions. Can Africa be seen as a potential ‘’World barn’’ ?

F.T.: The Commission emphasises the need for the coordinated

environmental challenge, a challenge that is particularly acute for Europe. It has been estimated that world energy demand is set to increase by more than half by 2030, and that demand for oil alone is expected to grow by over 40% during this period. Europe already imports half of its energy, and this is forecast to rise to nearly two thirds by 2030 unless action is taken.

While the economic impact of Europe’s reliance on energy imports may be cause for concern, the security consequences could be dire. Oil and gas reserves are increasingly controlled by the national monopolies of just a handful of countries, and recent actions by some of these monopolies suggest that energy security is an issue with geopolitical overtones. Diversification of Europe’s energy supply base is an urgent priority.

Growing energy consumption is not just a threat to Europe’s economy and political stability, it is also linked to environmental challenges – and climate change in particular. The world’s output of carbon dioxide (CO2) – which accounts for 75% of all greenhouse gases – is set to increase by 55% by 2030 with the EU’s emissions increasing by 5%.

The impact of this scenario on Europe’s environment, economy and way of life would be tremendous. For example, a six-metre rise in sea level would submerge large parts of Barcelona, Venice, Amsterdam, London, Stockholm, and Lisbon. It would exacerbate water shortages in parts of Southern Europe. And it could lead to an influx of millions of refugees from hard-hit developing countries.

nonetheless accounts for 30% of electricity generated in the EU and is the largest source of low-carbon energy available. The EU should create an advanced framework for nuclear energy, including nuclear waste management and decommissioning, respecting the Member State’s freedom to chose nuclear energy or not.

development of sustainable biofuels throughout the EU. It is particularly important to define these targets now, as manufacturers will soon be designing future vehicles that will need to run on these fuels. While biofuels are more expensive than other forms of renewable energy today, they are the only way to significantly reduce oil dependence in the transport sector over the next 15 years. And the Commission will establish extremely demeaning conditions to make sure that Biofuels used in the EU are produced with sustainable criteria.

This is why, for first time in history, the Commission has laid down sustainability criteria that will give European consumers the assurance that the biofuels used in Europe, and receiving support, are only sustainable biofuels. The public must be reassured that the biofuels they buy do not increase greenhouse gas emissions, do not lead to the destruction of rainforests or other biodiversity-rich areas, do not exacerbate food shortages and are not unreasonably expensive.

I.: 4. Is there any danger from the main cereal producers to stop exporting them?

F.T.: I don’t think our biofuel policity will have any major impact in

the cereal markets. The EU target (10% by 2020) requires a growth in consumption of agricultural commodities for biofuels of 4 million tons

I.: 5. What are the limits and the goals to set concerning cereal plantation for biofuel? And who should set those limits? Supranational organizations, as the World Bank, G8 or EU? F.T.: The Commission wants to be sure that no damage is produced in food prices and the directive includes a monitoring system that will oblige the Commission to monitor every two years the impact of the biofuels policy, including food prices and social conditions of workers.

One of the main responsible of expensive food is precisely high oil prices. One of the few tools the Commission has to push oil prices down is precisely, biofuels. Therefore we should put in balance the opportunities with the concerns. We should not forget the benefits that biofuels can have in developing countries.

The FAO and other organisations, like the World Bank, have recognised that biofuels can boost the investment in the agricultural productivity of farmers in 3rd world countries. But for that they need the security of investment that only binding targets can provide.

I.: 6. How will we, on a long term, reach the equilibrium between supply and demand of food and green fuels?

F.T.: The Commission considers that the long term benefits of biofuels

in terms of less CO2 emissions, security of supply and agriculture new opportunities (in the EU and globally) can be attained with the following principles: limited target (10%); Robust sustainability criteria and last but not least, aiming at second generation biofuels. If we keep this principles in sight, I think there should be no imbalance in the biofuels and food markets.

Nevertheless, finding out whether this is the case or not will be part of the role of the monitoring system that the Renewables directive will put in place.

I.: 7. EU defIned 10% in biofuels till 2010. Is this not contradictory if we have in account the food crisis?

F.T.: As I said before, If the EU target (10% by 2020) requires a

growth in consumption of agricultural commodities for biofuels of 4 million tons per year. In 2006, according to FAO figures, the global consumption of cereals was 2200 million tons per year. It is difficult to understand how an increase of 4 million tons a year could drive the price of a market of 2200 million tons. People claim that maybe US production of corn which may have been driving the current high prices, but there, again, figures tend to probe the contrary.

US feedstock demand increase for biofuels from 2006 to 2007 had an increase of 12.5 Million tonnes in one year. Again is difficult to understand how 12.5 million tones could have an impact on a market of 2200 million tones. In fact, even if the US domestic maize production has responded to biofuel demand, the US has managed to produce more bioethanol and raise its exportable maize surplus.

Contrary to the usual assumption, biofuel have not lead to less corn in the market, but to more corn in the market.

In fact, it is not corn but rice the cereal blamed for the high food price increase, and rice is never used to produce a single drop of biofuel.

Actually, at global scale, the most used agricultural commodity for biofuels is sugar cane in Brazil, where half of the cars run with sugar based bioethanol. Curiously, sugar prices have not suffer the hike price of other agricultural commodities, on the contrary, now is cheaper!

Therefore, there should be other causes for high food prices. Experts suggest that the rise in global food prices is due to many factors: most notably the weak dollar (food aid is purchased in dollar....one reason why the WFP had less purchasing power this year than previous years); the increasing world population; low harvests in many regions of the world; growing demand from east Asia – as their eating habits change (more meals per day + more meat); export restrictions in Ukraine and Russia (normally major global suppliers) and last but not least the increasing price of oil (knock-on to transport costs). Let’s not forget, that one of the few tools the Commission has to push oil prices down is, precisely, biofuels.

by Bruno Cachaço, Sustentare (www.sustentare.pt).

| Energy and food production - key issues

per year.Global consumption of cereals is 2200 million tons per year.

We do not understand how an increase of 4 million tons a year could drive the price of a market of 2200 million tons.

13

Energy and Food Production - Key Issues - critical view

Michael Hopkins

| Im))pactus September | October 2008

Director, MHC International Ltd. University Teacher

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Has the GREENING of CSR gone too far?

“I urge all those concerned with the future catastrophe of Climate Change, to include action both for Environmental issues and for Socio-economic Development, as they are closely linked and both, if not addressed, will have grievous implications for us all.”

Introduction

Al Gore has done a great job in bringing the environmental debate to the top of the agenda – if only he had made as much effort on one key social issue when he had the chance, the world would have been in much better shape now. I mean the 2000 election where he threw in the towel too early after winning the popular vote and knowing that votes in Florida had been severely manipulated. If he had fought on, refusing to accept defeat until recounts had been made then the greatest disaster of the past seven year- the Iraq war which is now estimated to have cost $US1.5 trillion dollars - would not have happened. 9/11 would still have occurred but we would have been in a better moral position regarding terrorism than we are today with the disastrous Bush in the White House. This is what I mean when I warn that social issues should not be completely dominated by the environment debate.

A recent e-mail in my in-box is in a similar vein. In the CSR news group csr-chicks Ulrika wrote “Hi CSR group members, could anyone advise me regarding a high-quality seminar or conference on Social Responsible Investment, SRI? SRI seems to be very focused on “Green Investments” and environmental issues. I am looking for a conference about SRI, focused on human rights, ILO rights, corruption as well as environment.”

Trends

In a recent survey of global company socio-political issues by McKinsey [1], more than half of the respondents picked the environment, including climate change, as one of three issues that will attract the most public and political attention during the next five years, compared with 31 percent in the previous survey a year ago.

My own view

Clearly, global warming is one of the key issues of the day. The evidence, surprisingly, is still being disputed on whether carbon

emissions cause global warming. For instance [2], John Christy, Professor of Atmospheric Science, at the University of Alabama feels that the science cannot be totally trusted because prediction is a rough ‘science’ and he notes “answering the question about how much warming has occurred because of increases in greenhouse gases and what we may expect in the future still holds enormous uncertainty, in my view”.

My view, like many others, is that the issue is far too important a threat not to dedicate the resources of 1% of GDP a year to greening our planet that the Stern Report suggested. But let’s be sensible about this and take action where the most impact can take place.

The concern about the environment is not a new issue. Warnings of global catastrophe came from the Meadows’ team in ‘Limits to Growth’ in 1971. They were also careful to point out that other catastrophes were also occurring and the late Donella Meadows with whom I had the privilege to work, was a keen advocate of reducing poverty in India at that time.

Environmental issues are, relatively easy to get fired up about.

During the cold war, the only international institution set up in the 1970s to bridge the gap between the West and the East was the International Institute for Applied Systems Analysis [3] . It was set up outside Vienna to work on applying the technique of systems analysis to cross border environmental problems – something deemed non-political at the time! Today, of course, IIASA works on modeling of global warming and 17 IIASA scientists served as authors and reviewers on the recently completed IPCC (International Panel on Climate Change) Fourth Assessment Report.

As readers will know, I have argued in a recent monthly feature [4] that we should choose our global catastrophes carefully! I wrote “… in addressing the potential catastrophe of Global Warming, are they taking their attention away from the closely existing catastrophe of poverty and under-development?”

Can CSR be the motor?

Yes, large corporations as I have often argued in our Monthly Features, have responsibilities over and above their daily diet.

They also, in some cases (see the MHCi Monthly Feature on CSR and the Military Industrial Complex) can negatively affect major issues. Therefore, my main thesis is that corporations should not go overboard on the environmental front without also considering key social issues and, of course, their own bottom line economic issues. Normally, we don’t want corporations not to make profits since they will wither and die which is of no interest to those who support CSR. What these social issues are, what the trade-offs are between focusing on the environment compared with key social issues, as well as how environmental degradation is linked with social deprivation and poverty, are covered elsewhere .

I urge all those concerned with the future catastrophe of Climate Change, to include action both for Environmental issues and for Socio-economic Development, as they are closely linked and both, if not addressed, will have grievous implications for us all.

I believe that CSR is the motor to link all these concepts together.

My own definition of CSR has settled to be that of “treating the organisation’s key stakeholders in a responsible manner”. I won’t labour that here since I devoted a longish chapter in my book “CSR and International Development – Is Business the Solution” (Earthscan, London, 2007) [5].

Thus CSR contains the major stakeholders and the key areas of social, economic and environmental. Nowhere, to date, do we find an overall assessment of what the priorities should be. For companies it is often obvious who the key stakeholders are and where their CSR priorities should lie. Less obvious is when companies reach out to wider community concerns where they work and how to treat their workers who are often in remote inhospitable places.

Michael Hopkins is Professor of Corporate and Social Research at Middlesex University Business School, and Managing Director of the CSR advisory company and think-tank MHC International Ltd. His books include The Planetary Bargain: Corporate Social Responsibility Matters (Earthscan, 2003) and Corporate Social Responsibility and International Development: Is Business the Solution? (Earthscan, 2006).

by Michael Hopkins and with thanks to Ivor Hopkins and Jawahir Adam of MHCi for comments and editing the earlier draft.

[1] Assessing the impact of societal issues: A McKinsey Global Survey, November, 2007.

[2] Cited by the BBC on Nov 13th 2007 see http://news.bbc.co.uk/2/hi/science/ nature/7081331.stm.

[3] http://www.iiasa.ac.at/docs/history.html?sb=3.

[4] MHCi Monthly feature see www.mhcinternational.com.

[5]Michael Hopkins: CSR and International Development – Is Business the Solution?

(Earthscan, London, Dec 2006, revised version forthcoming Earthscan, October 2008).

| Energy and food production - key issues

“Corporations and the public are bombarded with need to go green – reduce carbon emissions, buy local and organic products, conserve water – not surprisingly the ‘social’ part of CSR is getting less focus than it deserves.”

15

Energy EffIciency Analyze, Act and Transform, by Bruno Cachaço Energy efficiency must be considered a necessity, something that is inherent to sustainable development. This is why companies, individuals and countries all over the world are taking the next step in search of an important energy transformation.

This transformation must develop into a world commitment, in which States should set up goals and objectives while establishing a plan; in which companies and individuals must anticipate themselves and promote their energy efficiency by reducing costs and transforming their energy; and in which each one of us must be able to take its own responsibilities and find the most suitable solutions.

Presently, one can already find many energy efficiency studies, plans or manuals. The European Commission has published the Green Paper on energy efficiency [1] aiming to identify options and to provide tangible action plans at Community, national, regional and local level. It intended to promote energy efficiency in different European countries, providing States with the “incentives and tools needed to implement the necessary actions”. More recently, the International Energy Agency launched a document with recommendations, included in the G8 plan of action, which could not be clearer: ’’Saving energy is the most rapid, least costly way to reduce energy demand, CO2 emissions and energy supply investment needs’’[2].

of economic recession and slowing down of economic growth, which has concrete implications in the reduction of citizens’ purchasing power.

At companies’ level, one can find the Manual on Energy Efficiency that was published by BCSD Portugal, as well as private studies that analyze the energy efficiency in SME’s; in Portugal, one has realized that the maintenance and use of energy consuming equipments are the areas with the greatest potential for energy saving. There are also studies on the Portuguese homes according to which one can conclude that younger people reveal more efficient energy habits and also that the higher the socioeconomic level, the greater the energy efficiency level of that home.

Energy efficiency and energy saving are considered by many as the “4th energy”, ahead of renewable energy, fossil fuels and nuclear energy considering the energy, sustainable and economic performance. We also have another feature, the social dimension of this issue, in the scope of which it will be necessary to develop a behavioral habits’ culture of energy efficiency, which remains distant, maybe due to the adverse economic circunstances.

It is therefore necessary that companies, individuals and society in general analyze energy inefficiencies, act before them, modifying the way they consume energy, thus reducing their energy bill and related emissions. Nowadays it is possible to perform energy audits, enabling the identification of mechanisms and technologies that allow reducing the energy bill in companies, condominiums and houses. Let this energy revolution, already under way, lead us into a new energy age, ensuring a truly sustainable future.

We are currently undergoing a learning and experimental phase, meaning: good energy practices and identifying innovative ways of saving energy by reducing emissions and costs. We find ourselves in the middle of an energy transformation/evolution. The National Plan for Energy Efficiency, classified has “not enough ambitious” by Quercus and LPN, foresees a reduction of 10% in energy consumption until 2015, in four domains: transportation, residential and services, industry and State and also with a strong investment in renewable energy sources. On the other side, there are studies of private companies analyzing the European consumer, and especially the Portuguese, according to these studies one can easily understand that there are concerns and measure-taking intentions, but there is still a big discrepancy between attitudes and behaviors, since the

by Bruno Cachaço, Sustentare (www.sustentare.pt). main reason to reduce energy consumption is still the financial costs [1] (http://ec.europa.eu/energy/efficiency/doc/2005_06_green_paper_book_pt.pdf ). instead of environmental concerns. It should not be forgotten that, [2] (http://www.iea.org/textbase/papers/2008/G8_EE_2008.pdf ). over the last 6 years, the Portuguese economy has endured periods

| Energy effIciency - key references

energy effIciency- key references

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energy and challenges - view’s from portugal

Renewable energy sources Agostinho Miguel and João Saraiva

and the impact on the world economy

| Im))pactus September | October 2008

Portuguese Portal on Renewable Energy

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We all have heard the expression “give a man a fish and you feed him for a day” in opposition to “teach him how to fish and you feed him for a lifetime” as a metaphor that it is much more interesting to learn how to solve a problem than to have merely the solution without any effort. Renewable energy sources allow every community to act according to its surrounding ecosystem.

The concept of sustainable development can be summed up in the following sentence: we should not use what we don’t have.

This way of thinking raises relevant issues as to current standards of living, no matter the surrounding ecosystem. To start using local energy resources, focusing on decentralization, on ecological balance, respecting the environment and sustainability (as opposed to monopolies and centralization) is the clear path that we should follow to achieve a true harmonious life.

Renewable energy sources include solar photovoltaic and thermal power; wind power; biomass and biofuels; hydropower; wave and tidal power; geothermal power. All these energy sources are present in different proportions on planet Earth and their combined use is the formula for us to take advantage of the available energy in each ecosystem in a sustainable way. Raging from heat, electricity, over to driving force and even to storage we have everything we need.

Most of the world’s current problems of humanity were created by each of us and the solution seems somewhat complex in the present world circumstances, given all its addictions. Renewable energy resources and their use will solve most problems of the so-called developing countries, because they will be able to have energy that is available according to their own resources instead of developed countries’ resources (whether it is technology or raw materials).

Their development will match their needs against their resources availability. The true motto is to teach someone “how to build a fishing rod and its basic working principles”!

Portugal is a blessed country: it has a mild weather with plenty of solar, wind, biomass, water, tidal and even geothermal resources.

Nonetheless we are completely dependent on fossil fuels, beyond the large scale hydro – only valid in the electricity production domain – and we have not developed any other kind of renewable energy further than the existing small scale research projects. Recently wind power has hit the newspapers headlines has the champion of renewable energy resources alongside with solar photovoltaic and biofuels. Yet the approach has been purely economic and, as a result, all the investment has come from abroad and the

corresponding dividends are exiting Portugal, as well as the related know-how. The Portuguese have no relationship with renewable energy whatsoever and the current problems of the country – price increase of fossil fuels (they are all oil indexed), unemployment, and increase in the cost of living – could all have had a different response if the investment in local natural resources would have taken place together with professional training in these areas.

Even within this dark perspective Renewable Energy Resources are starting to be taken into the Portuguese lexicon. The “solar panels” in Alentejo, the “fans” in the north and west of Portugal are already expressions that are being used by many people, but let us examine the real evolution of electricity production, according to the Directorate-General for Energy and Geology (DGEG):

In the wind power field the growth went from less than 100 MW of power capacity, in 2000, to more than 2000 MW in the end of 2007, which means a 20 times increase in only 20 years. Photovoltaic power has gone from 1.2 MW to 14.5 MW, which means a 14 times increase in 7 years.

Let us mention the less discussed renewable energy resources: biomass without cogeneration which has risen from 8 MW to 24.3 MW, a 3 times increase in 7 years, and biogas has risen from 1 MW to 12.4 MW, a 12 times increase. Let us compare Portugal with Europe:

| Energy challenges - view’s from portugal

Source: DGEG. (SSH – Small Scale Hydro <= 10MW)

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Source: DGEG We are close to the top and we should be glad, but if we stop and think how many of us are, or have been, linked to the renewable energy sector; that energy consumption is not only electricity; how many solar thermal collectors are installed in Portugal? How do we use geothermal energy? Why do we continue to neglect the wave power energy that lies in our ocean? What about tidal power energy?

The worldwide increase of hunger and food shortage (cereals) has been openly discussed and one of the renewable energy resources – biofuels – is giving rise to it, but taking a closer look to what is really going on we can observe that developed countries want irreducibly to continue clinging on to their life styles while the poor countries have to stand by and watch their food crops being used to produce fuel to American and European vehicles. Once more sustainable

development is a slogan instead of a life style. It may be hard, but we must be able to understand that there are limits!

Technologically we need to evolve, to become specialized, to grow in an independent perspective being able to sustain ourselves and to progress in terms of our quality of life.

That is, we can solve our resources problem and, at the same time, have something through which we can export knowledge and technology, as well as to share our experience with other peoples.

by Agostinho Miguel and João Saraiva, Portuguese Portal on Renewable Energy (www.energiasrenovaveis.com).

energy and challenges - view’s from portugal

Pedro Sampaio Nunes

| Im))pactus September | October 2008

Director in GreenCyber, SA

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“Nuclear energy is still a real possibility in Portugal, and I would say that now it is an inevitability in light of the evolution of the global energy context (...)”

Im))pactus.: 1. Can you provide an overall idea on the present situation of nuclear energy in Portugal?

Pedro Sampaio Nunes.: Nuclear energy is still a real possibility in

Portugal, and I would say that now it is an inevitability in light of the evolution of the global energy context, a possibility that has been adequately studied since the Nuclear Programme and which has lead to the presentation of the White Paper aimed at the Portuguese Government, in 1983, and in respect of which no decision has been made at the time. That White Paper was the culmination of a process in which Portugal had prepare itself for decades, establishing the still-existing Nuclear and Technological Institute, where the Sacavém reactor functions for research purposes.

More recently, and since 2004, a private group has decided to invest in the possibility of building and operating nuclear power reactors. For that purpose a company has been set up – ENOPOR, Energia Nuclear de Portugal, SA – and it has promoted the pre-feasibility study for a commercial reactor in Portugal.

I.: 2. There is a clear rejection of nuclear energy by this Government. Do you believe that choosing renewable energy sources is the most suitable option?

P.S.N.: Choosing renewable energy sources could be the right option

if there was a technically correct notion of its real potential and cost, considering the technologies now available, and of its contribution to help solving the severe Portuguese dependence in importing primary energy. But unfortunately that notion is inexistent, and we are witnessing a massive mobilization of resources that are drawn from the economy, hindering in an almost irrecoverable way the competitiveness of Portugal’s production fabric, due to the indiscriminate support that has been given to those energy sources, assuming that one could cover in a significant way its dependence through a local non-nuclear production. That was due to the great influence of a school of thought in actively anti-nuclear themes, which was determinant back in 1983 in leading to the rejection of the Nuclear Programme.

Yet, the reality shows us that in spite of this huge effort to promote renewable energy sources, which reflects itself more and more in the Portuguese electric bill, its weight in the production of electricity has been decreasing, and Portugal is increasingly dependant on fossil fuels for energy production and on nuclear energy that is imported from Spain.

The contribution of renewable energy sources for the production of electricity was 80% in the 70’s, it decreased to 40% in the 80’s and again to 30% during the 90’s. Since 2000 it’s average contribution has been 28,5% and it is currently 27%, although it has been announced that last year we have achieved the value of 39% included in the Directive on Renewable Energy Sources and that we will attain the value of 45% announced by the Government for 2010. I believe that it

is totally impossible for that to happen unless 2009 and 2010 are two exceptional rainy years. The so-called hydraulicity correction that is done for the real values that I have previously mentioned, is done in an incorrect way even in relation to the Swedish declaration attached to that directive that includes it, and is misleading the public opinion.

I.: 3. We are witnessing the reactivation of nuclear power plants in some countries, namely Great Britain. Why do you think this is happening?

P.S.N.: We are witnessing the reactivation of interest in nuclear

energy around the world. In the United Kingdom there is an ongoing process to substitute end of life nuclear power plants, namely the ones using obsolete technology, such as the Magnox power plants, by third generation power plants, as the ones in the USA and France.

In Asia the construction rhythm as never slowed down, namely in Japan, China, India and South Korea. This last country, which has many similar aspects when compared to Portugal, such as the total area and geographic situation – a peninsula with a single border – has 20 functioning reactors and eight more already planned.

In 2005, around the world there were 24 nuclear reactors under construction, 40 already ordered and 73 planned reactors. At present there are 36 reactors under construction, 93 are already ordered and 218 planned. If presently there is a worldwide energy revolution, it is taking place in nuclear energy and biofuels. It is by these means that Humanity is to solve the strong limitations it is facing in the next three decades.

I.: 4. Is nuclear energy still a taboo issue, in your opinion? Is that a reasonable approach given that it is a viable energy and economic option?

P.S.N.: In Portugal it is no longer a taboo, but there is a strong bias based upon the lack of information and knowledge on this issue, and politicians’ fear to deal with a subject in which they are afraid of an open discussion, due to the influence of the school of thought that I previously mentioned, made up of old fighters against nuclear energy and based upon an ideological, instead of scientific, conception of energy issues.

I.: 5. What would be the most appropriate locations for a potential nuclear power plant in Portugal? The best place would be close to water and Spain. Is there social acceptance and are municipalities open to a project of such a magnitude?

P.S.N.: There are several factors that determine the choice of the best location for a nuclear power plant. The ideal would be to build it close to the sea to prevent the construction of cooling towers.

But considerations related to the Iberian energy market reality now point for a location that should be closer to its larger centers

of consumption, and that is why most recent studies propose a location closer to the Portuguese border with Spain. Of the several contacted municipalities, some revealed a good acceptance, as is the case in Spain or France, in which there is a sort of contest to select a municipality among several candidates.

interest is due to the high competitive advantage of European nuclear energy at this time, since it is presently the most important means to produce electric energy in Europe, accounting for one-third of all electricity generation. There is nowadays, in electricity generation, a two-speed Europe: on one hand, the center of the continent which is heavily nuclearised - France, Belgium, Switzerland, Sweden, etc. – on the other hand, the Iberian Peninsula countries which are trying I.: 6. Do you consider this renewable energy stage as a to solve this problem through a strong investment in renewable transition period for nuclear power? energy sources. Since economic activity always depends on energy P.S.N.: No, it is absolutely necessary to invest in renewable energies to to a greater or lesser extent, that fact has forced Iberian countries to maintain a close contact with the ongoing technological development, subsidize electricity rates in a masked way, thus creating explosive and to arise strongly when the learning curve of those technologies deficits in relation to tariffs, which in Spain have already reached an will grant them enough competitive strength. At present, investing in unbelievable value of 15 billion euros. That cost, whether it will be paid renewable energies to develop them and thus building its competitive by consumers or by contributors, is a huge burden for the economy strength is a huge mistake in resources allocation, especially in a of those countries, and in my opinion, the main obstacle to the future country where they are scarce. But I am sure that the future will economic recovery of Portugal. include a combination of renewable-nuclear in particular in the materials area and, depending on the technological evolution, we could consider nuclear energy as a transition stage for renewable I.: 8. Is safety still a nuclear energy problematic key-issue? energies and not the opposite. In the future it will all depend on P.S.N.: If safety would be a problematic key-issue of nuclear energy, how the materials technology is able to overcome the hurdles to certainly there wouldn’t be private interest to invest in that energy widespread disseminate photovoltaic energy systems and to make source. The truth is that, amongst the significant means of producing possible nuclear fusion. electricity, statistics reveal that nuclear energy is, unquestionably, the safest way. The only serious accident with fatal consequences in 50 years of nuclear energy – Chernobyl – is now well investigated not only in its real consequences, not as serious as those disclosed by I.: 7. Can one say that there are national investors the media, but as well as in the impossibility of repeating itself with interested in this Project? present technology.

P.S.N.: Not only can one say, but one may be certain that there are several investors interested in nuclear energy in Portugal, as in Finland, where the Government will have to decide among the several

by Pedro Sampaio Nunes, Director in GreenCyber, SA. applicants to the 6th and 7th nuclear reactor in that country. That

energy and challenges - view’s from portugal

Nuno Ribeiro da Silva

| Im))pactus September | October 2008

Endesa Portugal President

22

Im))pactus: 1.Producing green energy from cereals is presently one of the options for the production of low-CO2-emitting energy. Can Africa be considered as a potential world granary?

Nuno Ribeiro da Silva: Two preliminary issues, it should not

crops, forestation, and every use that implies CO2 sequestration makes full sense. It is a win-win approach.

As to conventional solutions, Africa has also a huge and unknown potential due to limited knowledge – when compared to Europe or be forgotten that biofuels are a palliative for the problem of Asia – on coal, natural gas and oil potential, onshore and offshore. It transport fuels, they appear as a substitute to oil-based products. is a under explored continent in the perspective of oil, gas and even The fundamental problem of transportation is related to the coal. It is precisely in these aspects that China is investing. China, anachronism of the internal combustion engine. Therefore, the main in every program that it tries to establish with African countries, it issue we are presently facing is also an opportunity, which appears invests above all in traditional fossil fuels. one century later, to promote a revolution for transportation that have been using the combustion engine, because according to physics and thermodynamics laws its efficiency cannot be higher than 15%. To give an idea of the modern engine efficiency, suffice I.: 3. Is there a real danger of Africa being, once more, to say that Ford’s cars 100 years ago had the same efficiency of exploited to the meet the needs of rich countries, without current engines – these are physics and thermodynamics laws. So, a clear and practical concern for the human and social let us remember that biofuels are merely a palliative, a transition factors? If yes, what measures need to be implemented? stage, a break in a critical problem that is related to the definitive N.R.S.: It has to do with African leaders. At present there are several abandonment of the combustion engine. Therefore, to continue countries in Africa that are living on fossil fuels, namely Gabon, investing in the combustion engine is wrong. That said, and being Nigeria and Angola. It is expectable that other countries will follow, established a connection between biofuels and turmoil situations namely Equatorial Guinea, while São Tome and Príncipe and also related to food products, it makes sense to produce biofuels Mozambique are starting to grant concessions, in return of good where there are bioclimatic conditions, available soil and process prizes, and areas to prospect and exploit in the Mozambican offshore, efficiencies, namely photosynthesis, provided that conflicts with in Tanzania, etc. There is a problem of internal management. This is the production of food products is inexistent. In those conditions not only a problem for western countries, given that the citizens of it makes sense to produce alcohol and sugar cane-based fuels. those Middle East countries with oil revenues – despite not being What doesn’t make sense is to force the production of corn in the particularly transparent – benefit much more from those gains US Midwest, only by economic and subsidization reasons. In short, than the inhabitants of Nigeria, Angola or Gabon do, or those from let us have no illusions, biofuels are only a postpone to a critical Equatorial Guinea will ever do, and so on. Countries have constituted and decisive global issue, related to the ability to abandon, after national companies, such as NNPC in Nigeria or Sonangol in Angola, one century, the good services of the combustion engine, but until therefore international and multinational companies operating then let us produce biofuels in specific areas that do not clash with in those countries cannot be accused of seizing their national food production and where there is a reasonable energy efficiency resources… The real problem is related to unsound management process. To give an idea, when producing alcohol based in Brazilian and local opportunistic leaders, therefore it is no longer a western sugar cane one obtains a proportion of 1 to 8, but when producing problem and a situation similar to the one that took place in the alcohol from the US Midwest corn the proportion is of 1 to 2, 19th century, after the Berlin Conference, in a colonial framework, in therefore it is unreasonable. which European countries merely took away iron, other metals and raw materials used in the first industrial revolution. Now it is their problem.

I.: 2. Could Africa become the most important solution for energy problems in developed countries and also in fast-developing countries, such as China?

N.R.S.: This question is the consequence of the previous one. It

makes sense to develop programs in Africa not in a perspective of intensive farming and one-crop farming for biofuels, but mostly associated to CO2 Kyoto mechanisms. It makes full sense that Africa becomes a target to implement CDM mechanisms and CO2 mitigation. In this context, it makes sense to take Africa into consideration, because it is a continent where the soil is extremely under-used in a perspective of agricultural potential, and therefore

I.: 4. The European Union (EU) has set the target of achieving 10% of biofuels within the overall fuel needs, until 2020. Isn’t this a contradictory target bearing in mind the current food crisis?

N.R.S.: It is somewhat, but in view of what has already been discussed… in Europe, where the well-known land set-aside has been gradually put aside together with the reduction of the landuse for agricultural production (given that we produce subsidized butter and subsidized milk, etc.), the CAP reform was responsible

“… Government states in this law that it sets prices only in exception years, without specifying the definition of a specific year. And for the Government, it looks like every year is an exception year especially when it feels politically uncomfortable in updating the prices in order to reflect the increase in the cost of electricity production”.

for encouraging the agricultural area reduction. When Europe set this goal of increasing the contribution of biofuels, it makes all the sense from several points of view. Since Europe can use land that was being subsidized for farming to be abandoned, it can introduce energy cultures on that land. In that context, it makes all sense. On one hand we are creating revenues for rural areas and, on the other hand, contributing to an auto-production of fuels to mitigate the oil-base products dependency in Europe. In sum, that is a reasonable objective, since the land that is being deactivated in the scope of the CAP reform enables to transfer revenues to rural areas without conflicting with OMC rules and thus contributes to the solution of a European problem.

I.: 5. Do you agree with the current policies to face the oil price increase?

N.R.S.: The producer countries and emerging countries, such as

China, India and others, are subsidizing the price of fuels, which is a total nonsense and the results are dramatic because, in truth, consumption continues to increase in a colossal way and people aren’t receiving signals, through price, that lead to a their rational use, and a set of mechanisms that reflect the real cost of raw materials are not being introduced. At European level and even in OECD, but in Europe in particular, the cost increase is correctly reflected in the price, it is the only possible attitude to have, although States in general are earning more money, namely the Portuguese, because as we known taxes (not only VAT but also the tax on petroleum products) are ad valorem. From the moment the product cost increases – although the VAT and TPP percentages are close to each other (50% for diesel and 60% for petrol) – the value also increases because it is ad valorem. But this is the right policy to pursue and one shouldn’t try to mitigate it or try to hide from reality. Energy and prices aren’t simply petrol, diesel and natural gas.

In the electricity scope, namely in our country, a “crime” is being committed, and last week’s law is an evidence of that “crime”, since it called some the ERSE founding objectives into question – the Government states in this law that it sets prices only in exception years, without specifying the definition of a specific year. And for the Government, it looks like every year is an exception year especially when it feels politically uncomfortable in updating the prices in

order to reflect the increase in the cost of electricity production.

Therefore, the answer to the question “Has the Portuguese policy, thus far pursued, regarding oil-based products price been correct?”

I would say no.

I.: 6. In your opinion, the creation of city tolls is a good measure?

N.R.S.: For certain, it is a very correct measure, but it is just one

of the measures… there is a large practical experience in using dozens of political tools to mitigate the use of private transport.

Our situation is shocking, since in daily journeys between home and work 90% of the cars have only one person, and I don’t think there is a single European country with similar rates. Therefore these type of measures is fundamental, namely if tolls are part of a strategy to encourage the use of public transportation. There are many different measures to discourage the use of private transport in cities and to encourage the use of public transportation and to punish those wanting to use private transport in the city. It seems obvious that “luxury” has to be paid – who wants to, pays, who doesn’t want to, doesn’t pay. It is a vicious cycle, for instance, CARRIS (public transport company) is very impaired by having the streets of Lisbon filled with cars, forcing them to achieve a miserable commercial speed of 15 Km/h. It is a snowball effect, not only for people, but also for an entire sector, since the investment reduces drastically… but without so many cars in the city, buses would be able to work much more in less time because they wouldn’t be stuck in traffic. This is a logic process, to remove cars from the city and thus making public road transportation to work and circulate. It is a crucial measure and there is an historic opportunity to do it, because people are now able to understand such a measure.

I.: 7. Do you agree with certain opinions that it is diffIcult to win bids against GALP and EDP, for instance?

N.R.S.: The Government program and the resolution of the Council of Ministers in 2005 declare that Galp and EDP will be the relevant energy producers in Portugal, thus the energy market in Portugal is inexistent. Furthermore, last week’s provision is the evidence of

| Energy challenges - view’s from portugal

“It makes sense to produce biofuels where there are bioclimatic conditions, available soil and process efficiencies, namely photosynthesis, provided that conflicts with the production of food products is inexistent…What doesn’t make sense is to force the production of corn in the US Midwest, only by economic and subsidization reasons”.

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energy and challenges - view’s from portugal

| Im))pactus September | October 2008

“Presently, in our situation, and from an economic viewpoint nuclear is nonsense. From a technical point of view it is stupid. From the environmental point of view it is a wishful thinking. … It is possible to identify 15 European civilized countries that do not have nuclear power plants. When some people say that most of Europe’s electricity production comes from nuclear energy, it is a lie (...).”

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that. The Government has decided to protect EDP and Galp, and the Portuguese have to pay for that protection. It would not be surprising if the Spanish Government would take reprisal measures, since it has a much more open attitude before EDP and Galp than the Portuguese Government towards Spanish companies. The Portuguese Government has profited a lot from this intimate relationship with EDP, and it has chosen this path.

I.: 7. 1 The relationship with Spain is, according to the Government, very healthy…

N.R.S.: The Spanish government has been very distracted but it still

knows what is happening, however that is a matter for governments to discuss. In my opinion and I might sound biased, EDP and Galp are not public companies, because if they were formally public it would be possible for me to say, as a Portuguese, that I would lose on one side but I would gain on the other. But they are not. Galp has directly or indirectly 8% of public capital and EDP a quarter. Therefore, the Portuguese are paying for the privileges that Galp and EDP have

I.: 8. Should nuclear energy be an immediate investment?

Could it be a good solution for transportation (hydrogen)?

N.R.S.: This is a matter for a large discussion…

I.: 8. 1 Therefore, you believe that a serious debate should take place?

N.R.S.: Serious, objective and complex! I have a formula… I would

environmental point of view it is a wishful thinking. I have no prejudice on this issue, besides it is possible to identify 15 European civilized countries that do not have nuclear power plants. When some people say that most of Europe’s electricity production comes from nuclear energy, it is a lie. It is sufficient to analyze the known data and figures. And in last instance I’ll discuss the safety issue of nuclear energy…

I.: 8. 2 Safety is still an issue…

N.R.S.: Undoubtedly, I have been in Chernobyl 3 times… from an

economic and technical point of view nuclear energy doesn’t make sense in Portugal. Even if we enter the esoteric discussion on safety, I have to say that in an accident at a coal mine, an explosion in a refinery may trigger casualties, but it is a controllable accident. But when a nuclear accident takes place – although the probability is very low – it is something for which we have no antibodies, or even mechanisms to control such an accident. That is a qualitatively different problem. But returning to the economic and technical viewpoint, I have access to the figures because my company operates 8 nuclear power plants and I can say that nuclear energy isn’t cheap and, technically, it would only operate in Portugal with subsidies.

I.: 9. Concerning the fInancial sector and the role it should play, the banks should promote differentiated loans to investments and consumptions with reduced CO2 emissions and energy consumption?

N.R.S.: That differentiation makes full sense. The recent entry into

force of the directive on environmental responsibilities reflects directly these concerns into the clients’ risk and loan conditions. It is no longer just a plain voluntarism of financial institutions in being the harbinger of more national and eco-friendly solutions, since it is a matter that makes sense even in risk analysis. Banks are, in the risk analysis scope, entities that allegedly take into consideration every single aspect, and at present there are objective reasons to differentiate. There is discrimination in relation to companies and projects that have a reduced environmental risk, due to the environmental directive that imposes a set of responsibilities on companies and managers. We are mentioning signs that legislation has assimilated and materialized, from the market point of view, and which influence loans risk and banks exposure.

rather have China and India, which are fast-growing electricity markets, using nuclear energy instead of coal, I would rather. At present, in Portugal, electricity represents 25% of final energy consumption (and nuclear energy can only generate electricity), and 40% of energy generation comes from renewable energy sources, which means that we are talking about 13% of the national energy problem. Bearing in mind that the Portuguese electric system is more than established, it is economic and technically unreasonable to build a nuclear power plant in Portugal. And no one can build a nuclear power plant in Portugal without subsidies. There is also another issue, related to the initial question, which is assuming that transports will turn to electricity. Then, in my opinion, instead of having 25% final energy consumption we would end up with 60% – which represents a new problem. If that was to happen, I would discuss the use of nuclear energy in Portugal, but not in the present context. That is, if transports would start consuming energy, directly (vehicles using battery charges, batteries, etc.) or indirectly through hydrogen (to produce hydrogen it is necessary electric power plants), final energy consumption would rise from 25% to 25%+38% (current final energy Nuno Ribeiro da Silva, graduated in Engineering and Economics and consumption), that is 60% of final electricity consumption. In these has a Masters in Political Economy and Energy Planning by the Lisbon circumstances it makes sense to consider nuclear energy. To consider Technical University, he is presently the Endesa Portugal CEO. and discuss… because even then it would not be straightforward.

Presently, in our situation, and from an economic viewpoint it is nonsense. From a technical point of view it is stupid. From the

by Bruno Cachaço, Sustentare (www.sustentare.pt).

energy and challenges - view’s from portugal

Paulo Caetano

As if biofuels account for everything…

In the last few months, a day will not pass by without a discussion on this issue: the skyrocket increase of cereal prices is causing a crisis of huge proportions, including a humanitarian crisis. Some have shown themselves concerned with the fact that such an increase might augment the poverty in Portugal too. But here is the truth: in the last year the medium increase of cereal prices was 75%. The wheat price has risen 130% during the same period and the price of rice has doubled since the beginning of the year, breaking records by reaching unprecedented prices in April. The World Bank has emphasized that due to this price increase, in this last year alone more than 100 million people are without food and in many countries there are street riots due to extremely high cereal prices and to the fact that there is not enough food for people to survive.

The most common reason mentioned as responsible for the cereal prices increase is its use for biofuels production, as a result of the aggressive policies in this matter of both the European Union (EU) and the USA. But not only is this the most commonly mentioned reason as it is the only reason that is mentioned.

However, it is necessary to present other significant motives that explain this crisis and that will take away the humanitarian crisis burden from the only, real and functional short-term solution and alternative to fossil fuels.

During the last 30 years, we have witnessed a total rupture in the world export and import structure of cereals, due to a loss of 75% of biodiversity as a result of industrial monocultures that cause soil exhaustion, water reserves depletion and desertification. At the same time, climate change, which is worsen by industrial farming, has also a significant impact in the reduction of the amount of cereals produced in many countries (such as Kenya and Mozambique, although 2007 has been a year with a worldwide record production).

Besides these reasons there are others such as the increase of food and ration demand in China and India (since more than 2.5 billion people are now gaining economic capacity to feed themselves) and/ or the unbelievable oil price increase that makes industrial farming more expensive. Likewise we cannot overlook the impact of some factors of production such as pesticides and fertilizers, whose demand increase can lead to a rise of productivity as well as to a

significant increase in its costs, with direct effects in the final prices of cereals.

Just as important, or even more important, are the constantly debated and controversial agricultural subsidies in the USA and EU, that had lead to the destruction of thousands of small sustainable farms in developing countries, precisely those where the cereal prices increase has more damaging impacts. Approximately 70% of developing countries are net importers of agricultural products, most of them due directly to those policies.

Finally, it must be mentioned, because it is probably the biggest cause, that since the collapse of the financial markets due to the subprime crisis, there was a strong movement of speculative capitals towards agricultural commodities – presently, investment funds control approximately 60% of the wheat trade.

In fact, while 100 million people are starving due to the increase of cereal prices, the profits of the 6 major cereal traders (4 from the USA, one from Japan and another from Singapore) have increased between 30 and 92% in 2007.

Therefore, and as one can notice, there are several aspects affecting the worldwide prices of cereals, and that is why the debate should not be limited to or even cantered in the promotion of biofuels.

There is nothing more interesting to those that really are profiting from the cereal prices increase, than to blame a fundamental measure to fight climate change and world starvation.

I would dare to say that biofuels might even become, differently than what has been said, the solution to the cereal crisis, and even more, due to the needs of biofuel companies, dedicated crops of these raw materials might be produced using abandoned soils and labour in developing countries, covering the local need for cereals and providing jobs and development for local populations.

by Paulo Caetano, Director of Ecoprogresso.

| Energy challenges - view’s from portugal

Director of Ecoprogresso

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energy and challenges - view’s from portuguese ngo

Francisco Ferreira

| Im))pactus September | October 2008

QUERCUS, with collaboration from the Energy and Climate Change Group

26

Im))pactus: 1.Producing green energy from cereals is presently one of the options for the production of lowCO2-emitting energy. Can Africa be considered as a potential world granary?

Quercus: The question cannot be put in those terms, since the use of

cereals is not considered to be a green energy. Using cereals to produce biofuels – that is the issue – implies a partial substitution of fossil fuels used in motor vehicles in accordance with certain principles.

On 7 July 2008, the European Parliament Committee on the Environment has approved new and less-demanding objectives in the use of biofuels for motor vehicles.

The use of biofuels should not be the only way or the main solution to reduce the emissions of motor vehicles. The investment in technological development is a key aspect that leads to a more sustainable development in the medium-short term.

I.: 2. Could Africa become the most important solution for energy problems in developed countries and also in fastdeveloping countries, such as China?

Q.: Africa cannot be seen, once more, as the world’s granary for the

production of biofuels. Africa needs to produce food for its own population which is precisely the issue that should concern developed countries – the way to help African countries. There are probably some areas where certain non-food crops can be cultivated, provided that the environmental impact is reduced and duly evaluated in accordance with the demanding principles of sustainability and overall efficiency in terms of preventing CO2 emissions. However, one has to be careful when generalising that fact to an entire continent that is already facing the consequences of global warming and dealing with a severe social, economic and political crisis.

I.: 3 Is there a real danger of Africa being, once more, exploited to the meet the needs of rich countries, without a clear and practical concern for the human and social factors? If yes, what measures need to be implemented?

Q.: There is always a danger. That is why the focus of several

Governments, imposing environmental principles of transparency and sustainability to the development and operation of Non Governmental Organizations (NGOs), is a key issue. In the particular subject of biofuels, cooperative work has been carried out between Environment and Development ONGs, precisely to better monitor this issue in an integrated manner and also to reduce the risks of bad practices.

I.: 4. The European Union (EU) has set the target of achieving 10% of biofuels within the overall fuel needs, until 2020.

Isn’t this a contradictory target bearing in mind the current food crisis?

Q.: On 7 July 2008, the European Parliament Committee on the

Environment has reviewed downwards its biofuel target for 2020, which demonstrates a turning point regarding this issue even in European institutions.

The European Parliament Committee on the Environment has agreed, by vote in Strasbourg, on a target of 4% concerning the incorporation of biofuels for 2015, and a target ranging from 8 to 10% for 2020. That measure was based on the assumed negative effects related to some of these alternative fuels, in both environmental and social terms.

Moreover, the Members of the European Parliament have sustained that the bioenergy target established for 2020 should include incorporation, between 40 and 50%, of electricity and hydrogen powered vehicles using renewable energy, biogas and 2nd generation biofuels.

There is currently an increased awareness regarding the production of biofuels and the conflict they might cause in terms of food safety and nature conservation. This is a clear political signal to reduce the use of energy crops in the production of biofuels.

It should not be forgotten that the Portuguese target is more ambitious than the European, defining a 10% incorporation of biofuels for motor vehicles until 2010. According to Quercus this target should also be revised, and even more now that the EU target was reviewed downwards its target. Despite this is not a critical issue in environmental terms, several automotive manufacturers in other countries have refused to honour the warranty for purchased vehicles in view of such a high percentage of biofuels incorporation. In Portugal the current incorporation rate is 4%, but for the country to achieve 10% until 2010 – a target established by the current Government under the National Program for Climatic Change – it must be done at the expense of imports.

I.: 5. What is your opinion on the work developed by this Government in the energy area, namely renewable energy?

And what do you think about the delay in the invitation to tender concerning the 15 biomass power plants for the production of electricity?

Q.: The installed capacity to produce electricity using renewable energy

sources has increased from 4.800 MW in 2001 to 7.700 MW in 2008.

Wind energy becomes more and more important in electricity production. Between 2004 and 2005 wind energy production increased 121%, between 2005 and 2006 it increased 67% and between 2006 and 2007 it increased 38%. In 2007, wind energy accounted for 28% of the overall energy production. Biomass power plants should work in cogeneration, i.e. producing heat and electricity. It is known that the

efficiency of a cogeneration biomass power plant is much higher than a conventional power plant producing electricity. As a result, its location should be close to several industries that need steam, hence taking this fact into consideration.

Government has to think about energy as a whole package: it cannot think about dams to store renewable energy from wind power without analyzing alternatives; it cannot think about biomass power plants only to prevent forest fires. Energy policy requires much more coordination.

I.: 6. Do you believe that nuclear energy is still a taboo? In the United Kingdom several decommissioned nuclear power plants are being restarted and many say that it is the right option…

Q.: No, I do not think that nuclear energy is a taboo. In 2007, Quercus

participated in several debates promoted by different entities all over the country discussing nuclear energy, but unfortunately it was a limited debate that did not include the entire Portuguese energy system as Quercus wanted.

One can rapidly list 15 reasons to contest nuclear energy: 1. Portugal has a huge opportunity in energy conservation and energy efficiency.

2. Portugal has a huge implementation potential of renewable energy.

3. The only purpose of nuclear energy is electricity production and this one accounts for only about 20% of final energy consumption in Portugal.

4. Nuclear energy is much more expensive.

5. The fallacy of producing clean electricity in terms of greenhouse gases emissions.

6. The security of energy supplies is compromised – the decentralization allowed by renewable energy sources is opposed by a nuclear power plant.

7. Nuclear energy is only viable at the cost of huge government subsidies – Portugal sustains much more investigation on nuclear energy than energy conservation and renewable energy.

8. Portugal will become dependent of imported and expensive technology; one more dependence on other countries and, in this case, a dangerous one.

9. Official scenarios demonstrate that Europe is not investing in nuclear energy and Portugal would be in counter-cycle.

10. The longevity of nuclear waste and the legacy for future generations.

11. The risks concerning the transport and storage of nuclear residues.

12. Expected time of construction.

13. Nuclear power plants decommissioning costs and its related consequences, still not adequately assessed.

14. The secrecy and incentive to militarism.

15. The difficulty in finding a suitable location.

I.: 7. In your opinion, the investment in transport, namely road-transport, that the Portuguese Prime-Minister, José Sócrates, wants to do in electric cars is correct? What about city tolls?

Q.: The investment in electric cars is necessary but its impact is going

to take a considerable amount of time in terms of replacing part of the Portuguese vehicle fleet and it cannot be considered as the key solution to the problem of transport emissions.

It is vital to have a clear and strong investment in public transport as well as to manage to transfer passengers from the individual transport to public transport. In the last report on the implementation of the measures of the National Program for Climatic Change it is mentioned that the expansion of the underground railway network in Lisbon and Oporto failed to have the expected impact, that is, to transfer passengers from the individual transport to public transport. This is precisely the issue one should be focusing on.

I.: 8 And in aviation, what are the short term solutions for airline companies? Many of them have already started discharging and closing down some air routes…

Q.: O In 2012, aviation is going to enter the European Union Emission

Trading Scheme, as some other business segments that have already entered. It means new rules for airlines, but everyone will have the same rules. The price of plane trips will most probably increase, but it is important to invest in short and medium distance railway transport (inside Europe, for example). Oil prices are already determining a paradigm change in air transport, which most certainly will have to reduce its market share and increase its prices.

I.: 9. What is the role of the construction industry, the most polluting, in relation to the Portuguese energy bill? Can this industry act as a driving force for best practices in energy effIciency?

Q.: The construction industry is, in fact, one of the most polluting, being

only surpassed by the transport sector. According to data from the Directorate-General for Energy and Geology (DGEG) – the 2005 Energy Balance, Final Energy – the sector that consumes the most final energy is the transport sector (35%) and the buildings sector (residential and commercial) is responsible for 30% of final energy consumption – and they both keep on increasing.

It is vital that the construction sector (as all the others) becomes progressively efficient, not only by changing its own behaviors, but also by carefully choosing its building materials, construction methods and

| Energy challenges - view’s from portugal

“Africa cannot be seen, once more, as the world’s granary for the production of biofuels.”

27

Energy and Challenges - view’s from Portuguese ngo

| Im))pactus September | October 2008

“Renewable energy sources have already many applications that can be purchased by a final consumer, or citizen: sanitary water heating (solar thermal) or electricity production (photovoltaic and/or wind power).”

28

working tools (in a broader sense). The lack of efficiency of this sector is clear in the whole process of building a house, starting with the design process (conception stage) in which the best practices should be implemented bearing in mind the location, surroundings and exposure to the sun. Taking into consideration bioclimatic principles, choosing passive solutions (without energy consumption), its design, the shape of the building, choosing building materials (preferring local materials – decreasing transportation costs and emissions), investing in good insulation (walls, glazed surfaces and roofing) are, among other aspects, key features to reduce the need for heating and cooling equipments and achieving a high indoor comfort level, and thus improving the energy performance. And the waste resulting from this process, throughout the several stages, must not be forgotten.

There is no doubt that improving the efficiency of this sector, by implementing the best practices, will become a driving force to reduce the Portuguese energy bill.

Considering the fact that buildings have a relatively long renovation period (unlike vehicle fleets), energy efficiency has an increased importance in this sector.

The creation of the Energy Efficiency Label for buildings entails improved energy efficiency, requires that new buildings are class Bor above, and tries to encourage efficiency improvement in existing buildings, since it is mandatory to have a certificate whenever a building is negotiated.

I.: 10. What is the role of any citizen in terms of energy? Can we speak of energy social responsibility?

Q.: Each citizen has a determinant role in these issues. When one

talks about energy efficiency, it implies exigency, rigor and quality.

An informed and conscientious citizen will know what to look for and will prefer, in terms of construction, more efficient buildings, thus interfering in energy efficiency.

The energy efficiency label, already mandatory in many household appliances, has become a fundamental tool for citizens allowing them to become aware of appliances’ consumptions and to choose them consciously.

But in terms of behaviors we also have an important role to play in energy efficiency. The EcoFamílias 225 Project [1] (sponsored in the scope of the Promotion Plan for Consumption Efficiency by the Energy Services Regulatory Authority (ERSE)), which Quercus has developed in partnership with EDP, has uncovered the existence of a significant potential of unnecessary consumption – stand-by and off-mode consumptions represent annual savings of 35.815 KWh/year and 5,3% of EcoFamílias total electricity consumption.

We are all responsible for an improved efficiency, by making the right choices and incorporating the best practices in our daily lives. These changes start with us and make a difference.

I.: 11. Companies wishing to enter the renewable world will fInd which conditions in terms of tax benefIts? (this is not actually a question for Quercus…)

Q.: For companies wishing to invest in renewable energy equipments, there are deductions in corporate tax that can be made for a period of 4 years.

Renewable energy sources have already many applications that can be purchased by a final consumer, or citizen: sanitary water heating (solar thermal) or electricity production (photovoltaic and/or wind power).

Currently a consumer may invest in renewable energy to produce electricity, particularly in photovoltaic, and this system may become profitable if all the energy that is produced is sold to the network according to the premium scheme of the Program Renováveis na Hora [2] (http://www.renovaveisnahora.pt/). Every participant in this program will be entitled to a solar thermal system.

The amount that it is possible to deduct in IRS [3] this year (2008) is 777€ and unrelated to mortgage credit deductions (for components of renewable energy with a 12% VAT).

It is still essential that the tax on renewable energy equipments be equivalent to the non renewable energy tax. The consumption of electricity and gas has a 5% tax but, at the same time, some renewable energy components – such as the installation of equipments have a 20% VAT. This distinction is incomprehensible particularly at a time in which the Government is clearly investing in renewable energy.

I.: 12. A study by the Union Fenosa has presented a 4th energy, the one that is not consumed, that is, energy effIciency, as the best solution amongst renewable, fossil fuels and nuclear energy. What is your opinion on this conclusion?

Q.: Energy efficiency is in fact the cheapest way to “produce” energy.

One saved KWh, according to the Energy Services Regulatory Authority (ERSE), is ten times cheaper then a produced KWh, including by renewable energy sources.

It is vital to invest in energy efficiency at this time of change on how energy consumption and production is seen. The European Commission has identified a 20% potential energy saving due to efficiency increase.

This is also the goal set by the EU “Package Energy-Climate” for 2020.

Energy efficiency has an associated economic value – the investment that is no longer needed if that energy had been consumed. This is the huge economic value that must be attributed to energy efficiency for it to be able to be compared with other ways of producing energy.

by Francisco Ferreira , QUERCUS, with collaboration from the Energy and Climate Change Group [1] Free translation: “Project EcoFamilies 225”.

[2] Free translation: “Program for Renewable Energy at the Moment”.

[3] IRS: personal income tax.

energy and challenges - view’s from portugal

The climate change, the oil price escalade and the electricity bill increase have placed the issue of energy at the top of the agenda, making reflection and action a matter of urgency. It is within this context of environmental, economic and social outlines that the Municipality of Cascais has invested in the Cascais Energia Agency, whose main goals are to encourage a rational use of energy and energy efficiency and also to improve the use of renewable energy. By using local actions to face a global issue, the Cascais Energia Agency intends to contribute to the sustainable development of the municipality, fighting climate change and promoting social cohesion.

To achieve these objectives the Cascais Energia uses, as main support tool in establishing priorities in local strategy: the Municipality Energy Matrix.

Developed in partnership with the Research Group on Energy and Sustainable Development of the Instituto Superior Técnico (Lisbon), the Energy Matrix characterizes the patterns of consumption and identifies the areas that should be targeted as priority by the Municipality.

Bearing in mind the year 2005, the Municipality uses approximately 1,2% of all the energy in Portugal, particularly diesel and gasoline (fossil fuels). But the Municipality consumption occurs especially in the form of electricity.

The Municipality is responsible for emitting the equivalent to 800.000 tons of CO2 per year, which corresponds approximately to 4,4 tons by inhabitant per year.

In this context, the domestic sector is the main responsible for the consumption of electricity and gas in the Municipality. Therefore, the Cascais Energia has developed a set of innovative actions that intend to help the Municipality to improve its energy efficiency and use of renewable energy sources. The citizens of Cascais may ask for a technician that will perform an energy diagnosis of their houses through the Watts Buster Project.

An audit to every electric and gas equipment is conducted using specific software, and sometimes a thermographic analysis is performed. The owner receives, in the end of the diagnostic visit, a report illustrating the consumption pattern of the house and identifying the aspects responsible for the biggest energy waste. The report includes also a set of energy efficiency recommendations and it simulates the savings that can be achieved.

Cascais has an excellent exposure to sunlight and a housing stock made up of many dwellings. In order to enhance the acquisition of solar thermal collectors, the Cascais Energia intends to support its citizens in the process of choosing and installing systems of solar thermal collectors through the Cascais Solar Project. The Cascais Energia has established protocols with 10 local companies and ensured appealing conditions for citizens, such as a €200 discount in the acquisition of the equipment. A solar thermal collector prevents, on average, the emission of 1 ton of CO2 per year. Since there are 2600 hours of sunlight every year, this is an energy source that cannot be ignored. To Cascais Energia it is also fundamental to disseminate information and raise awareness among citizens as to energy efficiency and reduction of the ecologic footprint. Therefore, the Agency will implement in the school year 2008/2009 an educational program that includes every school in the Municipality, thus contributing to the awareness reinforcement on the energy theme in both school and family scope. It is important to provide an example that comes from within and that is why the Cascais Energia also promotes the adoption of the best environmental practices in the Municipality services.By monitoring consumptions in real time and auditing municipal buildings, the Cascais Energia Agency tries to enhance energy consumption and to reinforce the awareness of its users.

It should be noted the Escola Básica 2,3 Pereira Coutinho (Primary School), which has been the first Portuguese school to benefit from this innovative methodology, and it uses it to raise the awareness of its students.

The future municipal swimming pool of Abóboda has been also followed up by the Cascais Energia in every conception stage of the design basis to improve the energy efficiency of the equipment, which will enable estimated annual savings of €68.000 and a reduction of 215 tons in CO2 emissions.

Aiming to make the Environmental Interpretative Center of Ponta do Sal, a model building in the Municipality, creating a scenario of sustainable energy use, the Agency has carried out an audit, followed by the implementation of energy-savings measures. As a result, this is the first municipal building in the country to obtain an energy certification, in June 2008. On the site it will also be installed improved photovoltaic systems and urban windmills, as well as a solar desalination station, a weather station and a display with real-time information on energy consumption, energy production and resources availability. Bearing in mind the strong technological development taking place in the energy efficiency and renewable energy sector, the Cascais Energia develops projects in partnership with European institutions, assuring the exchange of experiences and the dissemination of new technologies.

It should be noted the CYBER DISPLAY Project, by the Association EnergieCités with more than 150 members in 24 countries, that aims to raise awareness among urban citizens towards a more efficient use of electric, water and gas equipments. In Cascais, this project will be implemented in 50 public buildings, from schools, sport buildings, office buildings, health care centers, among others.

The PRO-EE Project (Public Procurement Boosts Energy Efficiency) integrates an association of 18 countries, and it aims to develop and implement, in the public sector, public procurement procedures that ensure the energy efficiency of purchases. In the Municipality of Cascais it will be focused in public lighting, office appliances and vehicles, bearing in mind that public lighting was responsible in 2005, for approximately 80% of the Municipality’s electric bill. The Cascais Energia cooperates also in the SMART-SPP Project that aims to promote the introduction onto the market of innovative highly energy efficient technologies that are in the last stages of development.

The Municipality, to demonstrate it intends to carry on with the reduction of its ecological footprint and energy efficiency improvement, will join the Covenant of Mayors. This agreement is included in the European Action Plan for Energy Efficiency, which intends to reduce the emission of greenhouse gases in more than 20%, until 2020. Until now 95 cities have joined in, among which 15 European capitals. To achieve this objective the Cascais Energia intends to reinforce and enlarge the set of projects already described. The goal is ambitious but also necessary, and it entails clear advantages in the reduction of energy costs to the Municipality and a significant improvement of environmental indicators and, as a consequence, of citizens’ standard of living.

In order to promote this international experience and to encourage the debate on energy and environmental issues, and considering the current international conjuncture, the Cascais Energia will organize on 16 and 17 October 2008 the international conference “Energy Sustainability: the challenge of the century”.

This event will take place at the Estoril Congress Center and it includes the presence of renowned personalities in the energy sector. It intends to encourage the debate on energy sustainability, around four discussion panels on sustainable communities and the role of municipalities in energy efficiency, nuclear energy and the alternatives to fossil fuels, and the management of renewable energy to encourage its demand.

by Cascais Energy Agency

| Energy challenges - view’s from portugal

Cascais Energy Agency

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energy and challenges - view’s from portugal

Álvaro Brandão Pinto

| Im))pactus September | October 2008

Vice-President in COGEN Portugal

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The production of electricity and the need for energy efficiency The worldwide evolution that has taken place in the last few years has proven that there is a significant pressure on the demand side for energy, induced, among other reasons, by particularly high growth rates in developing countries, such as China and India. This demand increase has been met, mostly, through technologies of net energy production that, in addition to extremely low efficiency levels, they also use high-carbon fuels. The combination of these two negative aspects is particularly evident in the production of electricity and it challenges the sought sustainability conditions of this whole sector; it is therefore appropriate to promptly implement alternative solutions that are less onerous. As a consequence, it is especially relevant to promote projects that ensure the production of net energy, in particular electricity, by using a smaller amount of primary energy.

That objective, of key importance, can be achieved, using cogeneration power plants. In fact, this technological solution of producing electricity through the promotion of cogeneration units enables the heat that is usually wasted in conventional power plants to be distributed to local consumers that can technologically take advantage of that fact.

The installation of Cogeneration can, in fact, be considered as one of the measures that, most efficiently, puts into practice the objective of improving energy efficiency in the process of converting primary energy into electricity. First of all because the starting point is truly awful and, therefore, the improving potential is huge. To support this understanding, it is enough to mention that according to the International Energy Agency (IEA), the average efficiency of conventional power plants that produce electricity based on fossil fuels has been almost the same throughout the last two decades, ranging between 35 and 27 per cent. But, considering that in addition to this low conversion efficiency, there are losses of approximately 9 per cent due to electricity transmission and distribution lines to reach final consumers, one can easily conclude that more than two-thirds of primary energy used in the production of this net energy are wasted by the power sector. To reinforce this dramatic situation, it can be mentioned that accordingly to a diagram by the IEA, in which the global energy flows of the power sector are summed up, including those from nuclear power plants and other conventional solutions that use renewable fuels, out of 44.555 TWh of consumed primary energy only 15.623 TWh reach final users. These figures reveal a 31.5 per cent

overall efficiency, which means that some percentage of losses in the whole process have to be reduced in a nearby future, no matter what.

Secondly, because the improvement of electricity production efficiency induced by the installation of a cogeneration power plant might be significant if there is an important recuperation level for the heat that is usually lost in conventional solutions. In order to have a clear view, the electricity yield of a cogeneration power plant delivering electricity directly to a final consumer may reach values between 55 and 90 per cent, while the best conventional solutions, in an identical situation, have an overall production and transmission yield ranging from 45 to 50 per cent. This yield disparity, that may reach 40 per cent, has obviously an extremely favourable impact in primary energy consumption and electricity production, not to mention the reduction of CO2 emissions induced by lower consumptions.

Bearing in mind the previously presented data, one may legitimately question why there are still clearly inefficient electricity power plants and why cogeneration has not been further developed, since it allows an increase in energy efficiency. The first reason relates to the impossibility of finding consumers for all the thermal energy that is lost in conventional power plants. The second reason relates to the fact that, sometimes, the energy efficiency of a cogeneration project is insufficient to reduce energy costs. In fact, not always an act that allows the reduction of primary energy consumption, needed to make available the same amount of net energy, leads to lower costs for final consumers. This apparently contradictory situation is a consequence of distortions in the energy market, of mismatch between production cost and electricity cost, of distinct investment values according to the size of production units and production cost structures for different technologies that make available the same energy product. Therefore, it is necessary to implement pro-active policies for the development of cogeneration, if it is not to waste a significant primary energy savings. If such a waste takes place it would be unjustifiable under any circumstances. But under the present scenario of high fuel prices it would be a position open to criticism, to say the least.

by Álvaro Brandão Pinto, Vice-President in COGEN Portugal.

energy and challenges - view’s from portugal REPORT – Global Green

A Global Green is an Organization for Renewable Energy, technological innovation and R&D and it was recently honored due to the project it is implementing in Idanha-a-Nova. Global Green was awarded with the EUBIA (European Biomass Industry Association) Industry Award, an internationally renowned award at the 16th European Biomass Conference and Exhibition, recognizing the outstanding contribution to the development of the Bioenergy sector. It should be noted that this award is only delivered when the jury discovers an extremely worthy project. Some of the previous award winners are the World Bank, Ford or the Canadian Government.

First Project in Portugal aimed at the production in simultaneous of multiple types of Bioenergy, close to the source of resources and close to farmers; Promotion of the endogenous and self-sustained production of a supply of National raw material; Area of intervention in Beira Interior: Idanha-a-Nova, ova da Beira, Castelo Branco and Vila Velha de Ródão; Investment: 100 million Euro;

The Project includes the implementation of an innovative power plant to produce Bio-Energy and Bio-Fuels, combined with an efficient CO2 sequestration. The project is able “to generate revenues, which double the ones resulting from the best energy solution in terms of the existing alternatives”, states Ashok Hansraj.

This project was born as an alternative to growing tobacco, and has transformed into a massive and ambitious solution, or “integrated solutions”. Due to genetic improvements introduced throughout 13 years, they have obtained the European sugar cane (6th year in Portuguese soil), a variety which has unique characteristics, since it is resistant to European weather conditions, namely in Mediterranean countries, bearing extreme temperatures, and they have also introduced special varieties of sweet sorghum the particular feature of which is its increased productivity and profitability.

The use of these two new species, ideal for the production of ethanol and biofuel through a 2nd generation technology which uses agricultural waste, has lead to the concept of Agro-Biomass.

The project includes a Biofuel production plant, a Bioenergy Trigeneration plant (electricity, heat and cool), as well as a Research and Technological Innovation Center of Excellence, which will give counsel to every activity. It should be noted that the role of the Municipality of Idanha-a-Nova, which has been supportive from the beginning and has made available the property (still unlicensed) and also the role of the University of Castelo Branco, which has assessed the results (it will enter an industrial production stage later ).

Production Capacity: : 250,000 Liters per day of bio-ethanol and approximately 20 MW of electric Bio-energy, of which 13,8 MW will be injected and sold as exceeding energy; Employment: 250 direct jobs ; thousands of indirect jobs; Future application to a Pin Plus Project on the suggestion of the Government...

Broad Project…

Simultaneous production of Bio-Fuels and Bio-Energy while using Biomass as industrial waste, reduction of foreign dependence on raw materials, highest profitability per hectare than any other power production (ethanol enables a production 4 to 5 times higher than Biodiesel per hectare), promotion of social inclusion providing attractive conditions to young farmers (including farmers’ training), overcome the depopulation trend in the Portuguese interior, opportunities for the Portuguese Industry sector, ideal implementation in developing countries, extra benefits considering carbon credits. “We have already been invited by several international groups to implement this project abroad, but we insisted that the project is to be created as a Portuguese project, only then it will be reproduced”.

| Energy challenges - view’s from portugal

several steps ahead -anticipating the future

31

energy and challenges - view’s from portugal REPORT – Global Green

| Im))pactus September | October 2008

Ashok Hansraj in direct speech:

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“This solution is up to Fossil energy since it generates more than one energy type simultaneously in a single process – Biofuel (liquid fuel), Biogas and Bioelectricity (through Biomass that in trigeneration produces CHP – Cool, Heat and Power), in large amounts, unlike other conventional alternatives that only generate one energy source and are incapable of promoting a self-sustained socioeconomic development, like this solution”.

“Ethanol has multiple uses, not having the same limitations of biodiesel, and it has an assured production sale in several markets: chemical, pharmaceutical, perfumery, beer, spirits, etc. The worldwide demand foe ethanol is higher than biodiesel. We do not want any of these varieties to conflict with feed or food production. These plants are exclusively for energy production and for that purpose only. These are the plants of the future, excellent for the technologies of the future. I have orders 3 times higher than what we are going to produce.”

“Agro-Biomass has been undervalued due to the high moisture content which leads to irrelevant energy gains. An innovation introduced by us has enabled to solve precisely that issue, thus reducing the moisture level to 10% in an effective way without energy waste. In practical terms it results in three times more energy units, thus carbon credits, thus higher revenues. It is already being called Green Coal, a new component to produce energy in a way as effective as Coal, but even better, since it is environmentally friendly.”

“Our Innovations include several super-varieties of lignocellulosic plants, Sugar Cane and Sweet Sorghum, raw materials for the technology of the future, ideal to produce Biodiesel (2nd Generation) or Bioethanol (1st Generation).

We have introduced solutions for a chain multi-generation of energy, by innovative equipments that handle multiple raw materials in a multiprocessing system in which starch and sucrose coexist, that is, it is able to process both Sugar Cane as well as Corn in the same unit, which is unseen, and this feature enables us to have feed-stocks all year round nonstop. We have also introduced methods in handling and harvesting equipment, on the basis of our own creativity, that will enable us with the same equipments and tractors to harvest both lignocellulosic species, enabling us to amortize them in half the time than if it was according to traditional methods.” s.”

BIODIVERSITY was not forgotten “Thanks to our innovative conception, which includes multifeed-stocks and multiprocess systems, we are able to ensure the output of traditional crops and the best use of biodiversity. Counting on the support of the technology centre, we will introduce policies aiming to protect local biodiversity counterbalancing energy production. The sugar cane is environment friendly because it has a high level of CO2 sequestration, the same of high-cost forestation projects but without a high fire risk. Our sugar cane only needs to be cultivated every five years. It does the photosynthesis during 300 days each year, and it is also resistant to frost, squalls and rain, which are nowadays a certainty.”

Climate issues continue to get worse and immediate solutions are needed. This solution is, above all, extremely efficient in preventing CO2 emissions, since it generates 3 times more energy, thus implying 3 times CO2 gains. This is an extremely eco-friendly solution in CO2 mitigation, since it does not compete directly with food production, and can be implemented in every country, taking advantage of all agricultural and industrial waste.

Negotiations are taking place, and some have reached an advanced stage, to implement replicas of the project in partnership and smaller scale, in countries such as Angola, South Africa and Romania, with the support of the respective Governmental Bodies, not to mention the previously expressed interest by one the most renowned US association of producers.

Future Objectives – “At technological level we have tested, successfully, the production of Hydrogen in the most inexpensive way and the use of a solution with Ethanol in Diesel engines. We are receptive to investments and partnerships that may contribute to implement our solutions and innovations, at Global level.”

Renewable Energy-Technological Innovation-R&D

by Ashok Hansraj (ashok@globalgreen.eu). (www.eubia.org).

energy and challenges - view’s from portugal

a Portuguese Future ?

The conversion of the ocean waves’ energy into electricity has been in the focus of extensive R&D efforts since the seventies, however only recently the sector has started to receive significant interest on political and industrial level, as well as from the general public.

The dramatically increasing need for renewable energy (not further discussed within this contribution) has only been formally recognised in the beginning of the 21st century. Within the wake of the success of wind energy, also wave energy started to be given more attention, despite some credibility issues mainly related to several failures in the past.

The renaissance of the sector started with public funding within European R&D projects, and soon involved some players from the energy sector and adjacent fields, as well as venture capital, leading to the relatively fast development of several real-sea prototypes between 2001 and 2004.

Since 2005, a substantial increase in new concepts and industrial efforts, mainly driven by specialist SME has led to the present phase, which could almost be entitled a pre-commercial ‘gold-rush’ of this technology branch: although the market is not (yet) prepared, sea use issues and grid connection solutions still to be solved in detail and the lack of other infrastructural requirements, there are presently far more than 50 device developers world-wide that pretend to play a significant role in the future market. Whereas a good part of this number is still in a relatively early development stage, at least 10-20 concepts have a notable track record of R&D and/or technological development and in technological terms, a large-scale supply of electricity from ocean waves might be as little as a few years away.

Portugal has traditionally been active in the field of wave energy research, mainly through the wave energy group at the Mechanical Engineering department of IST (Instituto Superior Técnico), however know-how had mainly been created with respect to plant modelling and simulation, in the context of the development and construction of the first European OWC (Oscillating Water Column) wave energy pilot plant on the Island of Pico/ Azores. This project was an important milestone for Portuguese activities, although its structural implementation suffered a number of drawbacks.

Since 2000, a number of viability studies on project-scale but also regarding the socio-economic potential for Portugal and beyond have contributed to a better perception of the state-of-the-art and potentialities of wave energy, and one year later Portugal was the first country that explicitly introduced a feed-in tariff for wave energy technology. The tariff, at that time considered a world novelty, was never used by a developer team, however apparently galvanised a number of other countries’ initiatives in a similar direction, mainly in the UK, but also Ireland and later Spain and France. By 2003, the same group responsible for these studies initiated the Wave Energy Centre - Centro de Energia das Ondas (WavEC; www. wavec.org), a non-profit association of today 15 associate entities with the common objective to enable and accelerate a market-scale wave energy utilisation in Portugal and beyond.

Substantial practical experience has been gathered by WavEC, first by the participation in the testing of the 2MW full-scale prototype of the Dutch AWS technology (today UK company; www.awsocean.com), and then by

Frank Neumann

Wave Energy Centre, Vice-Director and Business Developer

the recovery, testing and constant improving of the Pico OWC, which had been transferred to WavEC for this purpose. Further, the Centre has started to be a major contact point and participant in international R&D efforts (e.g. CORES - Irish floating OWC OEBuoy; Equimar – Pre-Normative Research on EU level), as well as the initiator and leader of two European training networks for young wave energy professionals (www.wavetrain.info).

In 2004, WavEC prepared a comprehensive study for the Directorate of Energy and Geology, estimating a national wave energy potential of 5GW in the first phase of technology penetration, meaning an electricity contribution of up to 20% of the Portuguese needs. Following the idea and substantial efforts of WavEC’s Director, Prof. António Sarmento, the creation of a zone with facilitated access to licenses and grid connections for wave energy plants started to be discussed, in order to overcome the gap from technology development to market. The government set up a working group to investigate such a possibility, leading to a final document of the working group by 2006; and in early 2007, a law proposal for the Portuguese wave energy pilot zone was the result: a 320 km2 large area offshore S. Pedro do Muel, with an installed power of up to 80 MW in the first and 250 MW in the second phase, including a one-stop-shop strategy for licensing and grid connection. The law turned effective in January 2008 (DL nº 5-2008), however until end of the summer no actions have followed.

Behind the idea of such a dedicated development area are several advantages: (i) The developers have little licensing trouble, a guaranteed and fair feed-in tariff, and can count on a proper infrastructure for their prototype deployment and can concentrate on their key issues – their technology. (ii) The development starts from one key area, allowing to grow industry clusters faster, and simultaneously to accompany early–stage largescale utilisation in a controlled and monitored manner.

Unfortunately there are some drawbacks in the present approach: (i) The exclusive character of the zone, thus potentially braking down seriously other efforts to install large-scale wave energy. At present understanding, wave energy farms cannot be installed aywhere (ii) The time-scale becomes excessive; well 2 years after the recommendations of the working group still no management body exists and virtually nothing could be done. In other countries (Spain, France, Ireland), smaller test areas were started later and are partly already under construction.

As a combination of the former points, there is presently (and will be for quite some time) a somewhat grey zone for wave energy implementation in Portugal, until the pilot zone exists. The delay could bring along massive losses of potentially interested technology ventures to found activities in Portugal. If, reciprocally, the implementation of the pilot zone is driven forward as a political priority from now on, there are reasonable chances to create an innovative and strong domestic market for this new renewable technology branch.

by Frank Neumann, Wave Energy Centre, Vice-Director and Business Developer

| Energy challenges - view’s from portugal

Ocean Wave Energy:

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| Im))pactus September | October 2008

Route

34

Reference websites

Events

Quercus Energia http://www.quercus.pt

September 2008

Direcção Geral de Energia e Geologia www.dgge.pt

16th and 17th

BioEnergy World Americas 2008, Salvador da Bahia, Brazil.

24th to 26th

PowerExpo, Zaragoza, Spain.

Agência para a Energia www.adene.pt Portal das Energias Renováveis www.energiasrenovaveis.com Entidade Reguladora dos Serviços Energéticos www.erse.pt

October 2008

Cogeração em Portugal www.cogenportugal.com

7th and 8th

Conference Renewable Energy, Lisbon , Portugal.

Agência Cascais Energia www.cascaisenergia.org

9th to 12th

RENEXPO 2008, Augsburg, Germany.

Associação de Energias Renováveis www.apren.pt

November 2008

Associação Portuguesa de Energia www.apenergia.pt Ministério da Economia e Inovação (Energia) http://www.min-economia.pt Instituto Nacional de Engenharia e Tecnologia Industrial www.ineti.pt Sociedade Portuguesa de Energia Solar www.spes.pt Centro de Energia das Ondas www.wave-energy-centre.org Associação Portuguesa do Veículo Eléctrico www.apve.pt

Reference international websites United Nations (Energy) http://esa.un.org/un-energy European Commission (Energy) http://ec.europa.eu/energy/index_en.html European Biomass Industry Association www.eubia.org Food and Agriculture Organization (FAO) www.fao.org World Bank (Energy) www.worldbank.org/energy World Food Programme ( UN Food Aid Agency) www.wfp.org IMF www.imf.org Europe’s Energy Portal www.energy.eu European Solar Thermal Industry www.estif.org European Wind Energy Association www.ewea.org European Commission (Energy and Transport) http://ec.europa.eu/dgs/energy_transport/index_en.html

11th and 12th

Wind Energy Operations and Maintenance Summit, London, England.

December 2008 11th and 12th

II Congress of Renewable, Alternative Energy and Environment, Viana do Castelo, Portugal.

January 2009 19th to 21th

World Future Energy Summit, Abu Dhabi, Arabia.

Books Energy Subsidies, Lessons Learned in Assessing their Impact and Designing Policy Reforms, edited by Anja von Moltke, Colin McKee and Trevor Morgan, GreenLeaf Publishing.

The Business of Sustainable Mobility, From Vision to Reality, edited by Paul Nieuwenhuis, Philip Vergragt and Peter Wells, GreenLeaf Publishing.

Solar Revolution: The Economic Transformation of the Global Energy Industry, by Travis Bradford.

Renewable Energy: Sustainable Energy Concepts for the Future by Roland Wengenmayr and Thomas Bührke.

Earth: The Sequel: The Race to Reinvent Energy and Stop Global Warming by Fred Krupp and Miriam Horn.

Renewable Energy: Techonology, Economics and Environment,

by Martin Kaltschmitt, Wolfgang Streicher, and Andreas Wiese.

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