Source: http://worldcityweb.com/home/MIA/publications/magazine/51/872/

(3) Energy - Biofuels Buzz

by Doreen Hemlock

A year ago biofuels were hardly top-of-mind. Today they are the subject of constant chatter and the object of major investments. And its only the beginning.

Consider some of the recent biofuels happenings in South Florida: Port Everglades received its first major shipment of ethanol; a Bal Harbour firm arranged a $342 million deal to double ethanol production in Colombia; a Caribbean and Central American conference in Miami focused on biofuels; plus, a California group unveiled plans for a $96 million biodiesel plant in South Florida, the largest biodiesel project in the southeastern United States.

Of course, President Bush also signed a new energy law mandating U.S. refiners boost biofuels use five-fold to 36 billion gallons a year by 2022.

Made from crops such as sugar, corn or jatropha and from plant waste like wood chips or used vegetable oils from restaurants, biofuels are emerging as a favored green alternative to petroleum due to surging oil prices and concern over climate change. South Florida is becoming a biofuels hub because of its role as a business center for Latin America and its reliance on fuel shipped into its seaports.

Port Everglades underscored the biofuels trend in December, when the Hess oil company brought in 2.5 million gallons of ethanol from the U.S. Gulf Coast for sale in South Florida. Several terminal operators at the Broward seaport are investing in tanks to store ethanol, which is mixed with gasoline to trim greenhouse gas emissions from cars. Governor Crist supports legislation that would mandate a blend of 10 percent ethanol in all gasoline sold in Florida. At current use rates, the state would need nearly 900 million gallons of ethanol a year to meet that requirement, likely sparking major imports.

Meanwhile, South Floridas international business community is busy crafting deals to boost biofuels production to meet the rising demand both overseas and in the United States.

Miami-based The Conrad Group, for example, is setting up two $500 million private equity funds in Brazil and India to develop biofuels. The funds would sell shares on stock markets and invest in sugar-based ethanol projects in Brazil, as well as ethanol made from sugar and other feed-stocks in India, said the Conrad Group president William Nobrega, whose strategic consulting firm has offices in Sao Paulo and New Delhi. This is a global business. Its about cross pollination between countries, groups and technologies.

Colombia Investment

Also keen on biofuels projects in the region is HLE Consulting of Bal Harbour launched barely one year ago. The firm serves as financial agent for Controlsud International of Luxembourg, which aims to invest $3 billion in renewable energy projects worldwide. Controlsud just committed $342 million to build three mills in Colombia. WORLDCITY sat down with HLE Consultings chairman Dario Echeverry, 47, an environmental engineer from Colombia.

WorldCity: Whos investing in biofuels?

Dario Echeverry: In the past eight or nine months, with oil prices rising up so much, weve seen a surge in investment worldwide. Bill Gates bought into a few ethanol projects in Brazil. George Soros, ADM (Archer Daniels Midland) and Cargill bought in. The big investment bankers are
just putting in a little bit now. Its like the Internet in 1992, when they asked, Should I do this? So, theyre putting in maybe $50 million in a project here or there to see how it works out. Oil companies also are quietly making plans. They are the ones that are going to drive this, I
believe.

WC: What countries and what technologies are receiving most of the investment?

DE: Theres interest now in Brazil, Colombia and other countries that grow sugar cane, because cane produces a lot more ethanol than corn, and more efficiently. And with new technology, you
can double output per hectare by taking the bagasse (plant waste from sugar cane) that is usually burned for electricity and making it into ethanol too. The process also makes other byproducts that you can use for energy and sell. Sweden is getting involved in these new technologies
for ethanol, because they want to be oil-free in 15 years.

WC: What about U.S. investment in ethanol in Latin America?

DE: U.S. companies are investing some, but if the United States really wants to break free from oil, they will have to do away with the 54-cent-a-gallon tax on ethanol imports (from Brazil and other countries.)

WC: What is your consulting firm and finance group Controlsud focusing on?

DE: Our firm serves as a one-stop-shop for green energy, bringing together the projects with the financing. We recently worked on a $182 million municipal waste-to-energy project in Tallahassee
that also makes some ethanol, and were talking with Buenos Aires and other cities about using that technology. In Colombia, our $342 million project involves three mills that will produce up to 1 million liters of ethanol a day from sugar, almost doubling ethanol production in Colombia.

WC: How much investment might be going into ethanol these days across the Americas?

DE: Constrolsud chairman Alberto Grosso has estimated it to be at least $15 billion in 2007, and that could grow by 20 percent this year, depending on conditions in the world economy. Its like the start of the Internet. Were just starting the chain.