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Farmland Forecast

RSS By: Marc Schober,

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

Major oil company enters ethanol industry

Feb 22, 2010
Royal Dutch Shell plc has plans to strike a deal with Brazil’s Cosan for a $21 billion a year ethanol joint venture. Shell will become the first major oil company to access ethanol on this scale. The deal will be Cosans largest entry into fuel distribution as well. Cosan purchased Exxon Mobil’s Esso chain of service stations for $1 billion in 2008. Shell and Cosan’s 50/50 joint venture features 4,500 filling stations nationwide.
The companies plan to more than double ethanol output to up to 5 billion liters a year from about 2 billion now, according to Shell’s downstream director, Mark Williams.
“Brazil’s aim is to become an ethanol exporter,” according to Cosan Chairman Rubens Ometto. “Shell has distribution facilities throughout the world that we could use in a much more integrated way.”
While sugar is at 29-year highs, and Brazilian ethanol is derived from sugar cane, it may become difficult to keep production economical, although most analysts predict sugar prices to decrease by 2011, according to Reuters.
Shell has taken its position on ethanol becoming the first major oil company to joint venture with an ethanol producer. Other companies have looked into Brazil as well. Bunge Ltd bought sugar and ethanol producer Moema for $452 million in December, according to Reuters.
The Shell/Cosan joint venture is a major move connecting the largest sugar cane producer with a company that has great distribution and technology in Shell. The joint venture could promote cellulosic ethanol production down the road that would ease demand for food-based material used in ethanol production, like corn and sugar.
Other oil companies may choose to follow suit by gaining exposure in ethanol production, but Shell and Cosan have a strong first step. Grain demands will continue to grow with an increasing global population and changing diets, so further technology on cellulosic ethanol production could solve long-term food supply issues in the future.

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COMMENTS (9 Comments)
2:52 AM Apr 12th
Charlie Peters
Money available to clean air and improve smog program

Charlie Peters, The Daily Review / MY WORD, August 14, 2002

The smog check issue has been under continuous legislative debate since 1993. AB 2637 by Dennis Cardoza is an opportunity to improve program performance and public support.

We at the Clean Air Performance Professionals propose “reasonably available control measures” to improve California Smog Check performance. Consider a Consumer Assistance Program (CAP) quality audit (secret shopper) to improve smog check performance.

We propose using the CAP cars and funds to provide random quality audit of smog check providers. Audits that result in the car’s not being in compliance should be handled similarly to the former Consumer Repair and Education Workforce program. The Bureau of Automotive Repair program did not fine the licensees nor did it involve coercion. But when the question of “what would you like to do?” was asked, the shop took care of business and usually elected to fix the car.

The average smog check failure repair is about $ 150.00 statewide. The motorist pays about the same at the average repair station and the CAP station The average CAP repair is about $350.00. Many cars are not brought into compliance.

To level the smog check failure repair playing field so more cars meet standards after repair, the whole smog check market should be subject to a CAP (secret shopper) random audit.

Around 1985, BAR started a “missing part” audit. In 1991 that program was stopped,

The difference was a 300 percent change in result in finding the missing part.

When BAR ran fewer than on audit per station per year, the result was a change in behavior that started at more than an 80 percent rate, but moved to less than 20 percent rate of noncompliance.

The difference was a 300 percent change in result in finding the missing part. If the CAP audit was addressing the issue of repair compliance rather than just finding a missing part, the results may be the same or a 300 percent improvement in compliance.

With the missing part program, a follow-up audit with increasing demands lift the stations no options but to find the missing part or be removed from the game.

There are huge inconsistencies from smog check station to station and with BAR representatives. For BAR to decide a car is not in compliance, rules of smog check must be clarified. Money is available for the CAP program. It can be used for contracted scrap and repairs, or some of the funds can be used to evaluate and support improved
Performance of licensed small business. The cars and funds are the same, but the results may be credit for 2,000 tons per day in pollution prevention credit in the State Implementation Plan, rather than our current credit of fewer than 100 tons per day.

The governor and state Legislature would get the credit for improved performance. Performance improvements would be accomplished at a cost of less than $500.00 per ton. And program illusions would be reduced in 1 year.

Charlie Peters is president of Clean Air Performance Professionals. 510.537.1796

(retyped from original)

11:44 PM Mar 18th
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