(EnergyAsia, May 15, Thursday) — Just a year or two ago, every plantation company in Southeast Asia was clamouring to jump on board the biofuels bandwagon.

It was the solution made in nirvana for farmers and agribusiness groups which long had suffered the combined curses of low prices, unpredictable weather, volatile business conditions and often unsupportive governments.

In industrialising, urbanising Asia, the agricultural sector had become the unmarried ugly sister doomed to a life of servitude in the kitchen.

Then, somebody discovered or rather began promoting biodiesel as the miracle fuel created from crops as the world worried about global warming and rising oil prices.

Unglamorous palm oil was suddenly on the front and back pages of newspapers sharing the limelight with David Beckham. It was a no-lose proposition: local farmers would start making decent money for a change, the environment would suffer less if people used renewable crop-based fuel instead of the fossil stuff, and long-suffering motorists had a recourse to relying on OPEC and all those greedy oil companies.

As quickly as it came to town, the biofuels circus is now turning into a major embarrassment and political liability.

Environmental groups and scientists are disputing the idea that biofuels are necessarily green and carbon-negative. The recent outbreak of food riots and famine around the world has partly been blamed on the rush to produce fuel ethanol and palm oil-based biodiesel. Worse, the sharp rise in palm oil and ethanol prices have killed off the viability of many biofuels plants.

You know biofuels are out of favour when Asia’s leading agribusiness group, Wilmar International, actively discouraged reporters from delving on the subject at this week’s briefing on its first quarter financial results. In 2005, the company was proudly announcing its venture to build a biodiesel plant on Jurong, which it then cancelled a few months later.

Even though biodiesel accounted for less than five percent of Wilmar’s revenue of US$7.14 billion, reporters sensed a good story, and repeatedly probed the company’s officials.

Today, Wilmar operates three plants on Indonesia’s Sumatra island. As a result of the high cost of palm oil, the company operated only up to 80% of the plants’ combined capacity of 1.05 million tonnes per year, said executive director Chua Phuay Hee.

The Singapore-listed company derived the bulk of its revenue from producing crude palm oil, laurics, oilseeds, grains, consumer products, and operating its plantations and palm oil mills.

The company has been criticised by environmental groups including Greenpeace for contributing to Indonesia’s deforestation problems in expanding its oil palm plantations. In recent months, Wilmar has been stepping up its campaign to engage its critics.

When asked if the biodiesel hype is wilting under all that political, economic and environmental pressure, Mr Chua said that the fuel is still very popular in Europe.

Also, the idea for producing fuels from crops isn’t dead yet. Company officials added that it is looking into developing algae as a feedstock for biofuels.

SOURCE: http://renewablesreport.blogspot.com/