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Biofuels - a risky investment in a
rapidly changing market?
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Some recent investment
experiences in biofuels D1 Oils had an oil refining model but changed
their business model to incorporate feedstockproduction
This attracted new investment (BP), but it
seemed that expectations of ease / speed inestablishing jatropha oil production were over-estimated
Jatropha business model changed again nowwith extra focus on crop improvement
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Fundamentals still strong for
investment into biofuelsSummary of reasons to invest in biofuels
High costs of fossil oil importation. Demand will be underpinned by national mandates for
renewable fuels and market growth from China andIndia.
Biofuels can be integrated into existing markets withouthigh cost changes to infrastructure. Biofuels can also bedispensed just as gasoline is today.
From The European Biofuels Challenge: Developments in European
Union Policy and Industry Drivers By Urmila Doraswami. August
2008
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5.1.4.2 Multi-cri teria Analysis of Suitable Biofuel Feedstock alternatives
Biofuel feedstocks have been ranked in terms financial sustainability for small holder
producers, energy balance, GHG emission reduction, environmental impacts, habitatconversion, land and soil degradation, water pollution, and contamination fromprocessing effluents and agrochemicals, ease of environmental mitigation, human foodchain biofuel feedstock competition, compatibility with existing farming systems, waterand labor marginal productivities and market demand.
Rank Feedstock#1 Jatropha Curcas#2 Cassava#3 Sugarcane#4 Soybean#5 Maize
Other feedstocks (like palm oil) were deemed not to meet minimum qualifications forsustainability.
WWF/SNV Biofuel Study
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There is increasing commercial
interest in jatropha oilAir New Zealand to power plane w ith nut oil
AIR New Zealand will trial flying a jumbo jet partly powered by nutoil later this year. With oil prices soaring, the company is testingthe power of the jatropha curcus, a nut which grows in tropical,semi-arid regions.By Brad CrouchAugust 03, 2008
Toyota eyes diesel optionsToyota and PTT, in collaboration with Kasetsart University, have
been conducting experiments to develop biodiesel from the fruit
of jatropha. Santan Santivimolnathttp://www.bangkokpost.com/Business/28May2008
Bio Energy Plantations Pte. Ltd has signed its first Jatrophaoff-take MoU with leading bio-diesel producer Van Der Horst
Biodiesel Pte. Ltd.
http://www.bangkokpost.com/Business/28May2008http://www.bangkokpost.com/Business/28May20088/8/2019 Business Models to Attract Investment Into Jatropha
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Jatropha is the preferred feedstock
Conclusions from global market study*:
Jatropha is on the move on large scale expect
investments of >$1bn annually in the years tocome
Jatropha can be made sustainable if the rightmodels are chosen
Need to support research and the development
of showcase models
* By GEXSi from JatrophaWorld 2008 Miami
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To be attractive, business models
must now recognise:
The need to secure affordable feedstock
That investment in jatropha production is morethan securing access to vast areas of land
The importance of social and environmentalsustainability in feedstock production
The uncertainties and timescale in jatropha
production
That supply chains need to be established and
fostered.
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Jatoil Ltd
Jatoil is a sustainable global businessproducing renewable fuels with social &
environmental responsibility.
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Jatoil Corporate (ASX:JAT): a public
company Conduit for further development and delivery of
renewable energy technologies
Collaborate/partner with like-minded businesses
Perennial Bioenergy AS and Imperium Renewables, Inc
Service subsidiaries and JVs: loan & finance facilities
business planning
governance and systems
financial management
market development
technical development
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Jatoil development is based on:
Jatoils investment into jatropha businesses
Jatoil mandated to engage jatrophabiodiesel projects and businesses fordevelopment and co-investment
Attracting new investment in order to growJatoils jatropha businesses
Jatoil focused on staged growth with co-investors
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Jatoil structure provides for investment atvarious levels:
Jatoil LtdSydney
PT Biodiesel AustindoIndonesia
GreenEnergy BiofuelsVietnam
Newco
NT HBBT
Corporate Level
Country / Regional Level
Jat-Venture Stages 1, 2 & 3
Alliance partners
Alliance partners Alliance partners
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GreenEnergy Vietnam Biofuels JSC
Jatoil Ltd and GreenEnergy Biofuels Joint VentureAgreement May 2008
Initial Pilot project in Ninh Thuan approved byVietnamese Provincial Peoples Committees
Platform for future raising Competent local management
Test viability before major expansion/investment
Quality networks SNV Dutch NGO guidelines on win/win commercial relationships
Center for Biotechnology in Forestry expertise/technical relations
Ministry of Agriculture and Rural Development approval of best
use land allocation
Further investment on milestones achieved.
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Jat-Venture Stage 1
Agri-station that both proves the businessconcept and develops essential infrastructure forgrowth
Central office and warehouse
50-100ha model jatropha plantation
Plant propagation and nursery Refinement of jatropha varieties and associated
agronomy and crop management
Seed and oil processing facilities R&D facility
Local field training
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Jat-Venture Stage 2
Stage 2 expansion proves the commercial scale
Contract farming neighbouring Agri-station
Up to 5,000 ha in 2 year periodAgri-station now also for seed collection, processing
and possible refining
Local farmers supported with training, seedlings,fertilizer and management advice
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Jat-Venture Stage 3
Stage 3 commercial expansion to optimumplantation scale
Contract farming from 5,000 ha to 25,000 ha
Agri-station expanded and additional processingcapacity installed
Satellite centres established
Revenues within years 3-4
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Key features of attractive jatropha
business models: Secure access to CJO that is both affordable and
certified for social & environmental sustainability
Advanced value chain planning
Advanced supply chain development (preferably
with long term supply chain partners) High standard of management and corporate
governance
Plans with flexibility to respond to market changesyet with certainty for further investment.
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Attractive plans address the key
business risks Management
Production
Political
Market
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Our understanding of the risks in a
jatropha business plan is imperfect but growing!
Financial investors wary
Need more certainty and proof
Strategic investors ready
Need to secure feedstock
Prepared to share risks
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