Shell and Brazil’s Cosan

Royal Dutch Shell has finalized establishment for a biofuel venture that could dominate Brazil’s ethanol market and provide a platform for the export of the alternative energy source around the world.

Shell has agreed to set up a 50/50 joint venture with Brazil’s Cosan (cosan. com. br), the world’s biggest producer of ethanol from sugarcane, which the companies value at $12 billion. The new company is called Raizen. Raizen is a good example of the consolidation taking place in the Brazilian ethanol industry, which is still very fragmented and owned by local families.

Under a Memorandum of Understanding, the Shell-Cosan venture would include about 75% of Cosan’s assets, including its 2 billion liters of annual ethanol production capacity as well as its sugarcane processing mills, cogeneration power plants, and ethanol trading company. Shell would pay Cosan $1.62 billion to take its half-stake in the company’s core asset base. It would also contribute its 2740 petrol stations and other fuel-distribution assets in Brazil. Together, the joint venture would control almost 4500 Brazilian petrol stations that would pump Cosan’s ethanol fuel.

The joint venture will not immediately market Brazilian ethanol through Shell’s global distribution network. Demand for the joint venture’s ethanol in Brazil exceeds Cosan’s production capacity.

21.5

JOil

Singapore is a real clean energy research center in Asia. A good example is the collaboration between Tata Chemicals, Toyota Tsusho, and the Singaporean sovereign fund Temasek. They have set up the research company JOil PTE Ltd.

(www. joil. com. sg). This research company is developing the domestication of elite cultivars of Jatropha through tissue culture technology. The goal is to develop large-scale energy crops with high oil yields per hectare. JOil is experimenting with Jatropha in China, Thailand, India, the Philippines, Indonesia, and Kenya. The company is convinced that Jatropha can become the leading feedstock for the aviation, automotive, and power sectors.

21.6

Others

Other large companies and institutions investing in Jatropha include:

• Daimler: reviving its Jatropha activities by planting 100 hectares in India

• Toyota Tsusho: developing large-scale plantations in the Philippines.

• India Oil Corporation: planted 1000 hectares and planning to scale-up to 10 000 hectares.

• China National Offshore Oil Corporation (CNOOC): established a 60 000-tonne biodiesel plant in Hainan fueled by Jatropha oil.

• TNT: planting 24 million Jatropha trees in Malawi for fuel production.

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