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AND ORGANIC FERTILIZER, PLUS GENUINE LARGE-SCALE POVERTY REDUCTION, USING A PROVEN FARMING MODEL
An integrated approach to:
THE PROBLEM AVIATION GREENHOUSE GAS EMISSIONS AND THEIR IMPACT ON GLOBAL WARMING
The aviation industry is committed to reduce its greenhouse gas emissions. Aviation produces around 2% of the world’s manmade emissions of carbon dioxide (CO2), expected to increase to around 3% by 2050, according to the United Nations Intergovernmental Panel on Climate Change (www.ipcc.ch). At the Copenhagen meeting on Climate Change, airlines, airports, air navigation service providers and manufacturers were united in their commitment: to improve fuel efficiency by an average of 1.5% per year to 2020; to stabilize carbon emissions from 2020 with carbon-neutral growth; and to a net reduction in carbon emissions of 50% by 2050 compared to 2005. As fuel is one of the most critical elements, the aviation industry is turning to sustainable biofuels to provide a cleaner source of fuel. The International Air Transport Association (IATA) has set a goal for its members to use 10% alternative fuels by 2017. At the current jet fuel usage level of between 1.5 and 1.7 billion barrels per year, this goal would support demand for 200 million barrels of aviation biofuels per year by 2017. Following a number of successful test flights with biofuelblended jet fuel, the use of biofuels for aviation is now a confirmed option. With the certification process underway the challenge is to cultivate sufficient quantities of biofuel feedstock to meet IATA’s ambitious blending target. Biofuel test flights conducted in 2008 and 2009
Carrier Aircraft B747-400 B747-400 Partners Boeing, GE Aviation Boeing, Rolls-Royce Boeing, GE Aviation, CFM, Honeywell Boeing, Pratt &Whitney, Honeywell TBA Test Date 23 Feb 08 30 Dec 08 BioFuel Coconut & Babassu Jatropha Blend 20% one engine 50% one engine
7 Jan 09
Algae with Jatropha Camelina, Jatropha and Algae blend
50% one engine
30 Jan 09
50% one engine
12 Oct 09
Alternative Fuel (Gas to Liquid) 50% all 4 engines
23 Nov 09
50% one engine
“I expect the first aviation biofuels to be certified in 2012. The most promising biofuel crops are jatropha and camelina”
– François Gayet, Secretary General of the Aerospace and Defence Industries Association of Europe - 18 February 2010
Natural Energy Ventures predicts that the production of aviation biofuel from Jatropha will be the highest value added product, but Jatropha oil can also be used in biopower generation and for blending in automotive fuels. These are likely to attract a lower margin.
OUR SOLUTION TO FARM LARGE HECTARAGE
OF RENEWABLE, NON-FOOD ENERGY CROPS FOR THE
SUSTAINABLE PRODUCTION OF SIGNIFICANT VOLUMES OF AVIATION BIOFUEL
Jatropha, a non-food oil-bearing crop, is presently the energy crop of choice and front runner among a number of second-generation non-food feedstocks for the sustainable production of aviation biofuels. This is mainly credited to its considerable oil yield and its sub-zero cold flow characteristics. Jatropha is a ‘dedicated energy crop’, meaning that it is cultivated almost exclusively for the production of biofuels, removes no land from food production and does not compete in the edible oils supply chain due to its slight toxicity. A perennial plant, Jatropha is a renewable source of energy. Jatropha croplands produce ‘crude oil’, as do conventional oil fields. Jatropha’s characteristics and agronomic requirements make it particularly well-suited to the agro-climatic conditions and farming methods that prevail across most of Southeast Asia. Natural Energy Ventures has partnered with a Dutch/Indonesian corporate team of expert agronomists (“Plantation Group”), who pioneered various approaches to Jatropha cultivation and undertook extensive field research before, in early 2007, commencing a large-scale masterplan project - in collaboration with the Indonesian Government - to roll out in phases up to 600,000 hectares of Jatropha plantations in Central Java. Phases I and II (with separate shareholders), totalling 60,000 hectares are already planted, with the majority in commercial production. Over 150,000 barrels of Jatropha oil were shipped to the EU in 2009. Having proven the viability of the socio-economic farming model, with growing oil exports to the EU since 2008, the Plantation Group is now ready to launch the next phase of a minimum 25,000 hectares. The immediate aim is to plant 25,000 hectares prior to the rainy season in late 2010. This phase can be expected to generate its first oil in 2012, gradually increasing to 500,000 barrels of oil per year from Year 4. As a nonfood feedstock, Jatropha oil will attract premium prices in the high-demand aviation industry. The full 600,000 hectares of Jatropha, once fully planted and matured, could deliver in excess of 12 million barrels of biofuel per year. This would represent around 6% of the 200 million barrels of aviation biofuels required per year by 2017 – a significant contribution!
UNIQUE ASPECTS HOW IS OUR SOLUTION DIFFERENT?
Management of the plantation roll-out will be entrusted to the Plantation Group, which has developed and proven a socio-economic farming model that works, based on its proprietary systems, know-how and plant research base. The Plantation Group has partnered with a state forest company in a collaborative forest management scheme and undertakes responsibility for the planting of Jatropha on reforestation land for up to 30 years, planning and paying for its planting. In exchange for the cultivation until maturity of the Jatropha plants, the Plantation Group grants to tenant farmers (typically 4 per hectare) the right to intercrop between rows of Jatropha with cash crops (spices, grains, fruits and vegetables), carefully selected to maintain soil health and to provide the farmers with a good income. The Plantation Group provides agronomic support and advice, maintains detailed records and operates a price support scheme to maintain incomes from cash crops for the farmers, exporting the excess production to richer markets as organically grown produce. Upon harvesting, the Plantation Group pays the farmers a premium price for seed deliveries to its collection centres. A micro-credit loan scheme for the tenant farmers ensures that they can get started as cash crop growers, which is repaid in seed deliveries from Year 3 after planting. The scheme has a sophisticated series of checks and balances to ensure compliance and to compensate for failures.
INDONESIA THE IDEAL ENVIRONMENT FOR BIOFUEL FARMING
Indonesia offers a stable, low-cost environment, coupled with supportive government policies. The conditions on the island of Java are particularly conducive to the sustainable and profitable cultivation of Jatropha, namely large tracks of denuded land, abundance of landless farmers and favourable rainfall pattern.
Java is the most densely populated island in Indonesia. Although the total area of Java is only 6.5% of the total area of Indonesia, around 64% of the total population of Indonesia lives on this island. The total state forest area in Java is 2.9 million ha. It is estimated that 35 million people interact with and depend on these forests in one way or another. Most of the villages that surround state forests are poor. The villagers have limited employment opportunities and most have no land rights.
CURRENT PROJECT STATUS READY TO PLANT 25,000 HECTARES OF JATROPHA IN 2010
A nursery comprising 1000 hectares of top grade semi-mature Jatropha plants that will supply elite mother stock for all the planting areas has already been reserved. 25,000 hectares of state forest land has been reserved, ready for planting. All permits, licences and consents will be in place as a precondition for investment. Management contract with the Plantation Group is in place. Ready supply of up to 100,000 tenant farmers. A ready market for Jatropha oil as feedstock for aviation biofuel.
INVESTMENT PROPOSITION US$25 MILLION CAPITAL COMMITMENT
Natural Energy Ventures is seeking a capital commitment of US$25 million before the end of June 2010 to cofund the next phase of 25,000 hectares of a 600,000 hectare Jatropha plantation masterplan. For the 2010 planting season we are able to hold the per hectare capital cost at US$1,000. Planning and preparation for planting will take place from August to October, with actual out-planting scheduled for November/December 2010. A US$25 million capital commitment will secure a majority stake for 30 years in a highly-profitable integrated Jatropha enterprise that incorporates the plantation, plus a series of downstream milling and recycling activities, designed to add significant value in a zero-waste manufacturing chain:
1. 2. 3. 4. 5. 6.
The Investor will hold the 55% majority stake in an Offshore Investment Holding Company, with the balance held by a Plantation Group company, representing their contribution of the land-usage rights, permits and licences, elite planting cultivars, well-established relationships with state and governmental bodies, IP rights in the operational model and ancillary plant research. The Plantation Group company will have the right to appoint a majority of board directors of the Offshore Investment Holding Company. Decision making will be according to parameters set out in the joint venture agreement. This phase can be expected to generate its first oil in 2012, gradually increasing to 500,000 barrels of oil per year on maturity in 4-5 years. Note: Capital commitments can be made for multiples of 25,000 hectares, i.e. 50,000, 75,000 or 100,000 by multiplying the desired hectarage x US$1,000 per hectare.
Upland rice intercropping
Commitment to a full 600,000 hectares would make the Investor the world’s single largest producer of Jatropha oil, with production capacity in excess of 12 million barrels per year.
PROJECT SPONSORS, DEVELOPERS AND MANAGERS THE PLANTATION GROUP
The Plantation Group is an agricultural technology enterprise with expertise in crops science, agronomy and cultivation technology. It has developed high-yielding Jatropha plant hybrids, which give a superior yield and oil content. This is the result of more than 6 years of research and development with patented planting material and hybrid seeds capable of producing up to 3 tons of biofuel per hectare per annum. The Plantation Group is a leader in Jatropha research and development in Asia and together with its partners has successfully established first class research and technology bases in Indonesia, Germany, Netherlands, India, Vietnam and Malaysia. Ongoing research is critical to accelerate the commercialization of next-generation biofuels and renewable power generation. Combining agricultural and technological innovations, intellectual property rights and filed patents, the Plantation Group controls all aspects of proven Jatropha research, development, cultivation and processing, including bio-engineering, high-tech oil extraction and conversion technologies, commercialization of valuable by-products and the processing of Jatropha into high-grade biodiesel. With unparalleled access to suitable land banks in excess of one million hectares all across Asia, the Plantation Group pursues the large-scale commercialization of Jatropha plantations in multiple locations. The Plantation Group is focused on and dedicated to growing high-yielding Jatropha biofuel feedstock on an industrial scale and at competitive cost to meet ever increasing international demand for sustainable, renewable non-food biofuel feedstocks. The Plantation Group brings to the table an international network of top quality partners and strategic alliances across multiple industry sectors. Proof of concept is in place regarding oil yield, fuel properties and commercialization of by-products (biofertilizer, bio-gasification, electrification). All major ingredients for a large-scale plantation roll-out are based on proven and tested proprietary know-how and technologies.
NATURAL ENERGY VENTURES
Natural Energy Ventures (NEV) has partnered with the Plantation Group to secure investment funding for the expansion roll-out of the proven farming model on major new land parcels as part of a 600,000 hectare Jatropha plantation master plan. NEV has undertaken extensive due diligence and will provide project and financial oversight. NEV will also undertake the negotiation of trade credit, term loans and off-take contracts when appropriate and can also develop exit strategies for investors.
Michael Gorman, Executive Director, Natural Energy Ventures Limited Representative office: D-2-11 Jalan PJU 8/2, Damansara Perdana, 47820 Petaling Jaya, Selangor, Malaysia Mobile: +60-12-388 2933 • Email: firstname.lastname@example.org
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