Bio-energy fueling interest in Caribbean:

It’s interesting that everywhere in the Caribbean these days, the big issue everyone seems to be talking about is bio-fuels and renewable energy such as wind, solar and geo-thermal.
Last week, Guyana hosted a seminar on expanding bio-energy opportunities in the Caribbean. Several months earlier, Trinidad hosted a similar Caribbean conference.
At the agriculture Donors? Conference held in June in Port of Spain, the European Investment Bank found that the largest number of applications for funding were in the area of agro-energy and bio-fuels. 
With countries in the region, highly dependent on imported fossil fuel and facing increasing oil bills annually, is important that they have an energy security strategy that combines energy conservation and efficiency with investments in renewable resources.
Consider the region’s current predicament regarding their high dependence on imported fossil fuel. With the lone exception of Trinidad and Tobago, all other countries are net oil importers.
In 2004, the Caribbean imported more than 163 million barrels of petroleum fuels, costing in excess of US$6.5 billion.
The cost of imported oil in Jamaica, as an example, grew by 41 percent in 2005, by 30 percent in 2006 and is projected to pass US$2 billion this year, almost as much as the country’s exports.
The huge finances that small economies have to pay for oil,  impacts adversely on their development plans. It places a crippling burden on the State’s budget to improve essential social services such as health and education or even increase funding for anti-crime measures or improve the lives of senior citizens and the differently-abled among us.
It was also welcome news that the CARICOM Secretariat plans to establish a dedicated Energy Unit which would also focus on the renewable energy/bio-fuel sector to help the region in developing or expanding projects along these lines.
The secretariat has already been pursuing the Caribbean Renewable Energy Development Programme, aimed at removing barriers to the increased use of renewable energies and reducing implementation costs.
Earlier this year, the IDB teamed up with CARICOM to finance a study on expanding bio-fuel opportunities in Jamaica, Guyana and Barbados.
The study showed that with the right reforms and investments, each of these countries could substitute at least 10 percent of their current gasoline consumption with domestic ethanol fuel.
The countries, for instance, could co-generate a total of 100 megawatts of electricity by burning sugar cane bagass.
Interestingly, early commercial development of a gasification process to convert bagass into a gas to produce energy to power generating plants to produce electricity is taking place in the UK.
Barbadian Andrea Jordan, a researcher at Newcastle University said there has been “early commercial” development of the gasification process which can increase the amount of electricity produced from organic materials by more than 3.5 times.
This method can contribute up to 30 per cent of the electricity demand in countries such as Barbados, Guyana, Dominica, St Kitts and Grenada where agriculture waste material can be used.
Potential investors have indicated interest in the development or expansion of bio-ethanol enterprises in the region, particularly in Guyana and Jamaica. 
Trinidad, although a producer of oil and gas, has been exporting ethanol to the US over the past two years and CLICO, the parent of the ethanol company has indicated an interest in expanding ethanol production by the resuscitation of the sugar industry that has now officially closed down.
Jamaica is leading the region in producing and exporting ethanol – now a growth industry – and there are plans for its expansion as American demand for bio-fuels climbs.
Global Energy Ventures Limited (GEV), was the latest company receiving approval from the Jamaican government to construct a 60 million gallon ethanol dehydration plant to process some five million gallons of hydrous ethanol monthly.
Last April, this company signed a Memorandum of Understanding with the Guyanese Government on the possibility of producing ethanol.
Poultry producer, Jamaica Broilers has shipped its first volumes output from its 60-gallon ethanol dehydration plant while state-owned oil refinery, Petrojam, which has a has a 40 million gallon ethanol dehydration plant plans to expand production of ethanol by constructing a new 60 million gallon plant.
Jamaica Ethanol Processing, which is majority owned by the US-based ED&F Man also operates a 60 million gallon plant.
The Jamaican Government is currently in the process of divesting the assets of the its sugar company which owns the five state-owned sugar factories to short list investors with interest in ethanol production.
In Guyana which has a huge land mass, a number of companies from Brazil, the US and India have expressed interest in investing in bio-fuel/agro-energy production.
Just last week, Georgetown received a US$850,000 grant from Japan through the IDB to screen bio-energy proposals and which would help to jump start investment for bio fuel production and co-generation using bio-mass.
But with all this potentially positive results from investing in bio-fuels, there must be caution over the impact that increased demand for bio-fuels the world over will have on food prices even for food importing countries such as ours and on poor populations
Recent studies conducted by the Universities of Minnesota and Massachusetts, noted that the Caribbean region is already facing substantial hikes in its food import bill as a result of rising corn prices in the United States.
Rising corn prices are triggered by the continual expansion of the corn-based ethanol industry and the knock-on effects on food prices for both local consumption and export..
One of the studies indicate that increased corn-based ethanol production in the US could push corn prices up by 20 per cent by 2010 and 41 per cent by 2020.
These price increases could also affect the production of rice and wheat since farmers have already begun converting their fields to corn in response to increased demand for the commodity in the ethanol industry.
A recent joint Organization for Economic Cooperation and Development/ Food and Agricultural Organization (OECD/ FAO) report also warns that the current upward trend in world food prices could continue over the next decade as increased global demand for bio-fuels continues to create fundamental changes in agricultural markets.
The report which examined the global agricultural outlook up to 2017, says that while the current increase in food prices can be attributed to drought in food-growing areas and low stocks, the diversion of agricultural commodities to the bio-fuel industry will result in structural changes that could well maintain relatively high prices for many agricultural products.
While reduced crop surpluses and the decline in export subsidies are also contributing to long-term market changes, the growing use of cereals, sugar, oilseed and vegetable oil to produce fossil fuel substitutes such as ethanol and bio-diesel, is the principal reason for the feared protracted increase in the prices of agricultural commodities.
Apart from the impact of bio-fuel production on crop prices, the demand for agricultural products is also impacting on animal feed costs and, indirectly, on livestock prices.
According to the OECD/FAO report annual maize-based ethanol  production is expected to double between 2006 and 2016 while in Europe the amount of oilseed used for bio-fuels is set to grow from just over 10 million tons to around 21 million tons over the same period.
Ethanol production is expected to reach around 44 billion litres by 2016 while China is expected to increase its ethanol production from the current level of 1.8 billion litres to 3.8 billion litres over the same period.
The million dollar question that perhaps should be asked in light of these reports, is how should countries balance investments in agro-energy and ensure that food and commodity prices remain at a minimum.