Box Cargill Invests In Biodiesel Production In Europe

Cargill, a U.S.-based global food and agriculture company recently announced its acquisition of a 25 percent stake in Greenergy Biofuels Ltd. in the United Kingdom. Tesco owns 25 percent of Greenergy Fuels, which owns the other 75 percent of Greenergy Biofuels. Tesco is the leading biofuel retailer in the United Kingdom, offering biofuel blends at more than 40 percent of the petrol stations attached to its supermarkets.

Greenergy Biofuels is building a 100,000-ton (114 million-liter) capacity biodiesel production plant at Immingham on Humberside. There are plans to develop additional production facilities near Liverpool, where Cargill already operates a seed crushing plant. This partnership thus fully integrates the biodiesel business from provision of the raw materials, through manufacturing and retailing.

Cargill also has plans to produce biodiesel in Belgium and Germany.

Source: Cargill 2006. Available at

Similarly, major players in the private sector in the United States are investing in opportunities that have been created in the EU in response to climate change. (See, for example, the recent investments of Cargill, the Minneapolis-based agricultural commodities giant in Box 10.1.)

The transformation of the energy chain is clearly the heart of the matter. This can be done via incentives to continually improve energy efficiency, by reducing the need for energy, and by switching from fossil fuels to hydrogen and renewables, while relying on gas as the transition fuel of choice.

Despite its erratic progress, the Kyoto Protocol finally came into force in February 2005, a few weeks after the opening of the EU emissions trading scheme (EU ETS), which is linked to Kyoto by its national reduction targets and the flexible mechanisms—international emissions trading, CDM, and JI. Now we have a real, daily price for carbon. The first CDM projects have been certified. There is a growing volume of trade in EU Emission Allowances. In the United States and Australia, there is a continuing push toward cap-and-trade systems at every level other than the federal leadership, where—given the U.S. electoral timetable—we can anticipate a change in the U.S. federal position quite soon.

Recently, we have seen inclusion of the accession countries into the EU (despite some delays), and the neutralization of their hot air problem. Furthermore, two of those new members (Malta and Cyprus) produced national energy plans even though they were not obliged to accept greenhouse gas (GHG) caps. Meanwhile, EU-in-waiting countries (Bulgaria and Romania) have also produced NAPs preparatory to developing JI projects. Russia and the Ukraine have approved JI protocols also. As these and other trading schemes develop, we will see how they affect the transformation of the energy chain—the key to a global climate strategy.

The stakes are very high, potentially affecting the well-being of everyone on earth. We have already seen evidence of impacts at the individual level through the decline of Arctic culture, the spread of disease vectors as the earth warms, and increased deaths from heat stress, forest fires, floods, mudslides, and windstorms.

The world of carbon finance should be seen as broader than the trading of carbon credits because new financial instruments (such as weather derivatives and catastrophe bonds) are being developed to facilitate the transfer of weather-related risks—both for adverse weather and for extreme events. The use of these products will encourage companies to respond to climate change in a proactive way, searching for opportunities in this complex challenge. Furthermore, there is an increase in venture capital and hedge fund activity, which focuses on clean-tech and carbon-reducing activities.

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