Growing fuel: bioethanol is a plant-based fuel that can be produced from fermented crops, including wheat. The green fuels industry expects to benefit from a grain surplus in Europe. And one of the world’s largest bioethanol plants is being built in the UK.

　　ONE of the world’s largest bioethanol plants is being built by a new company established by business heavyweights with backing from two global private-equity firms.

　　The Ensus Group of the United Kingdom has announced that it has secured an investment approaching 250 million pounds for the “world-scale green fuels” facility that plans an annual production capacity of 400 million litres.

　　Even before the production plant has been built - at the Wilton International site, Teesside, north-east England - the company has secured a contract to sell all bioethanol output to the Shell Group for 10 years.

　　Business leaders and area representatives have given their backing to the project that has been heralded as a major step forward in establishing the Tees Valley as an important area for green fuel production.

　　Financial backing from two private equity firms, the Carlyle Group and Riverstone Holdings, has added to the 154 million pounds that Ensus had already secured from the banks.

　　Bioethanol is a plant-based fuel that can be produced from fermented crops including corn, sugar cane and wheat; the industry expects to benefit from a grain surplus in Europe.

　　The environmentally friendly fuel receives a tax subsidy from the UK government and fuel distributors are expected to use five per cent biodiesel by 2010.

　　The project will create 100 direct jobs and support 800 more during the construction phase. Renew Tees Valley is the company set up to promote renewable energy and recycling opportunities in the area. It said the project is a “very significant step forward in establishing our area as a key centre for green fuel technology”.

　　The management team has a broad range of skills, experience and expertise in establishing, operating and growing businesses similar to Ensus. The company is chaired by Sir Rob Margetts, and its non-executive directors all have relevant industry, political and financial experience at senior corporate and government levels.

　　Margetts, who is chairman of insurance firm Legal & General, said: “We plan to be a leading player in the biofuels sector in Europe, not just the UK.”

　　The group’s first production plant will use established and proven technology from Katzen, a leading technology company in the industry, and will be built on the Wilton International site, Teesside. The facility will be on an integrated petrochemical site with excellent road and port access for the supply of feedstock and the transportation of the finished product, bioethanol.

　　The European Union and the UK government are committed to reducing the use of fossil fuels in order to cut greenhouse-gas emissions and dependency on oil and to enhance security of energy supply. A number of EU member states (including the UK) have introduced, or are proposing to introduce, legislation to support biofuels by providing tax incentives and mandatory targets to increase the proportion of biofuels used in transport fuels.

　　In 2003, the EU issued a directive that targeted 5.75 per cent of transport fuels by energy content to come from biofuels by 2010. Also in 2003 a directive was issued enabling member states to encourage the use of biofuels through tax incentives.

　　In the UK, biofuels receive a 20 pence/litre fuel duty differential compared with regular petrol and diesel. The government has also announced that from 2008 it will further support the use of biofuels, with a target of five per cent of all road fuels sold in the UK coming from renewable sources by 2010.

　　Furthermore, the UK is committed to increase targets beyond five per cent after 2010. Other EU countries have taken similar actions. Germany has offered a 100 per cent fuel tax exemption and France wishes to go further by setting a target of seven per cent by 2010 and 10 per cent by 2015.

　　At present, the UK does not produce any bioethanol for fuel purposes, meaning that existing consumption is entirely sourced through imports.

　　Made from natural products such as wheat and sugar beet, bioethanol offers a renewable and environmentally friendly alternative to oil for petrol-driven vehicles.

　　The European standard for petrol states that up to five per cent of bioethanol can be blended with petrol and sold through existing distribution channels.

　　Ensus says it will produce it using wheat sourced from the UK and continental Europe and plans to build a number of world-scale plants in Europe.

　　One of the principal co-products from the production of bioethanol using wheat is a protein-rich animal feed called DDGS (dry distillers’ grains with solubles) that competes with products such as soya meal and corn gluten feed in the feed mix for livestock.

　　The EU has a substantial deficit of this kind of feed and imported 35 million tonnes of soya to be incorporated into feed in 2004/05. Therefore it is expected that demand for this kind of feed in the EU will remain strong and that DDGS will be used to substitute imported soya.

　　Sir Rob Margetts added: “I am very pleased to be involved with Ensus which is planning to be a front runner in the rapidly developing European biofuels sector. With the European Union’s policy targeting 5.75 per cent of transport fuels to come from biofuels by 2010, Ensus is well positioned to assist in reaching this goal. We are delighted to have such strong and committed partners involved in our first project in the UK and are developing plans to build further plants across Europe.”

　　Margaret Fay, who chairs the regional development agency One NorthEast, added: “I am delighted this important project is proceeding with financial backing in place, bringing with it the prospect of many new jobs and valuable investment for the regional economy. One NorthEast has backed the scheme with a 1.97m pounds selective finance for investment grant. Ensus’s investment at Wilton is further conformation of the Tees Valley as a world-class base for process industries.”

　　Biofuels are a source of renewable energy made from biomass materials. These differ from fossil fuels such as coal and oil that are not renewable and are in limited supply. The two best-known biofuels are bioethanol and biodiesel.

　　Bioethanol, an alcohol, is produced from biomass materials that contain starch and sugars. It is made by fermenting these organic materials to produce ethanol from their natural starch and sugar content. A main advantage of bioethanol is that it can be easily blended with petrol; a mix of five per cent bioethanol and 95 per cent petrol can be used in all cars today without the need for modifications to the engine.

　　The new facility is expected to come on stream by early 2009 and will produce more than 400m litres a year for Shell Trading. That is the equivalent of about 4.8 billion road kilometres (three billion miles) a year for an average car or enough to keep about 300,000 cars on the road for a year.　 (Source: British Consulate-General in Chongqing)