SOME LIKE IT HOT!

Thursday 1 April 2010, Kuala Lumpur, Malaysia

Some like it hot! And it’s just as well, because on that score the Malaysian Grand Prix never fails to deliver.

No sooner had the chequered flag been waved in Australia than the F1 Paddock was packed up and sent on its way to Kuala Lumpur for Round Three of the Formula 1 World Championship, which takes place just seven days later.

The 3.444 mile, 15-turn Sepang circuit near KL is where it’s at, a venue renowned for its tropical conditions and heavy downpours. These often have a hand in the outcome of the race and this time last year, the race had to be stopped when the track became more of a sea than a river. When it’s not raining, the intense heat can really put the car’s cooling systems to the test, not to mention the drivers, for whom Malaysia is one race that provides the acid test of their fitness levels.

Timo Glock, Race Driver #24

“For me, Sepang is a good track when the weather is dry. The heat and humidity are quite punishing and we would normally have two weeks to fully acclimatise to be ready for track and cockpit conditions of over 50°C. Plus you have the additional factor of humidity, which can be around 70%, so the cockpit can be a pretty uncomfortable place to be. It’s one race where you don’t want your drinks bottle to run out, although it’s a bit like drinking English tea anyway because, try as we do, we can never get the liquid to stay cool. When we have weather like we saw last year through the practice sessions, it’s impossible to prepare well and obviously if it rains during the race on that scale, you’re just a passenger in your own car.

“It will be interesting to see how different it is to race here with the heavy fuel, especially through the nice quick corners, although there are mix of low, medium and high speed corners which make this a challenging track generally. Apart from that I’m hoping we can have a better weekend. Everything was going well until I had my suspension problem, and we are starting to get on top of our issues as they arise. We have good pace and if we can continue to improve our reliability then I’m confident we will be in a better place by the time we get to Europe. In the meantime, every session at every race weekend counts and we have some good developments to evaluate here in Sepang this weekend.”

Lucas di Grassi, Race Driver #25

“Last weekend was disappointing for me because of the reliability problems we had. However, we have to move on and focus on better things to come. The guys are pushing really hard and we are improving all the time, sometimes in ways that may not be visible to anyone outside of the team because the problems are what other people see.

“Our obvious target here is to finish the race and we will be doing everything possible through the weekend to work towards achieving that. It will be an interesting challenge for the car and for me, as it’s a real test of what heat and humidity can do to both of us! On my side it’s the tougher races like this that make all the physical training worthwhile and it really brings home to us why we push ourselves so hard. For the car I think Bahrain was a good test of the cooling and we don’t expect any problems. I’m looking forward to my first Malaysian Grand Prix.”

Nick Wirth, Technical Director

“We’re looking forward to Malaysia as it provides us an early opportunity to put to the test our continual development of the VR-01. It’s been quite a challenge with the quick turnaround from the Melbourne race – for instance we had just five hours to strip the cars and the garage after the last race before the freight departed, which meant that we had to work quickly to diagnose the issues.
“Nevertheless, we’re ready to start Sepang with further revisions to our car to cover the recent problems, with the total focus on getting to the chequered flag, via a smooth weekend on both cars. The track itself is very different to the first two races with a different demand on car performance, so it’ll be interesting to see how we get on in this respect. As ever, we’ve prepared our drivers well on the Wirth Research Simulators, although their driving skills may well be tested to the limit with the prospect of afternoon rain for qualifying and the race.”

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Reflections on Copenhagen: The Economics of Green

By Dennis Salazar

Copenhagen – A Microcosm of the Green Movement

Last year’s disappointing climate summit in Copenhagen demonstrated if not proved two important things about “saving the earth”:

1. Sustainability is a very emotional topic for some
2. Sustainability is a financial topic for most

Unfortunately, what transpired in Copenhagen is probably the rule, rather than the exception. It was disheartening to realize the events probably represent and reflect the domestic and world population’s perspective on saving the environment.

Public Demonstrations versus Back Room Deals

Perhaps due to decades of protesting, a wide array of real or perceived injustices, unruly public demonstrations have for the most part become unproductive. Even the nightly news has lost interest in well meaning protesters being hauled away by force. I recall the first time I saw an eco activist chained to a tree in the seventies, and thinking “how cool is that.” It did not matter what the cause was, I really admired the commitment.

Three or four decades later, I realize what drew attention in that era, is now for the most part perceived as futile acts by someone at the losing end of an argument. Regardless of how sincere the motives or heartfelt the emotions, that type of action is not likely to move on-lookers from their steadfast self-focused positions. I now know that most compromise is made and ground gained in negotiations that are conducted in private and out of the camera’s view.

Green Is Indeed the Color of Money

In Copenhagen we learned countries are no different than people in that they tend to think and vote their checkbook, more so than with their heart. When push comes to shove, you can usually count on people doing what is in their best financial interest.

Even when the world economy was booming, we could not expect an underdeveloped country to agree to a deal that was almost certain to keep in its present, underdeveloped state. Just like we cannot expect a country that is growing rapidly in a depressed world economy to agree to a deal that is likely to make it lose jobs, profits or its competitive advantage. While we are all citizens of one earth, it is naturally our own families and nations that we are most determined to protect.

Back to Business

The question I answer on an almost daily basis is whether or not green is affordable. When I am offering a green packaging proposal, rarely am I asked about the environmental impact or how many cars it is the equivalent of removing off the roads. What two things people focus on are:

  • How much does it cost?
  • Will it help us gain sales and market share?

The economy has forced companies to evaluate everything from a top line and bottom line perspective. Doing something good for the sake of good has become a luxury most companies and people can no longer afford.

When is the Primary Motivation Green?

At a recent conference I attended a green marketing guru pointed out the fact that “saving the earth one (fill in the blank) at a time” was now one of the most over used and thus quickly becoming one least effective marketing slogans or tag lines today. Certainly if you Google “saving the earth one”, you will find over seventy million results. That is a lot of people and products rescuing the planet, unfortunately without all that much success.

I don’t deny that there are people who may choose one eating establishment over another because of their green efforts but the vast majority of us will visit, just as an example, a green pizza restaurant because the food and service is good and because it represents a good value. The fact that they deliver in electric cars is an eco perk but not the primary motivation for buying their product.

Maybe We’re Becoming Smarter

Personally my days of public demonstrations have long passed so it is unlikely you will ever see me being hauled away by “the man”. I am much more likely to be caught “saving the earth one corrugated box at a time”.

Some may consider my comments and perspective as cynical or pessimistic but I believe they are realistic because until we acknowledge and accept the economic realities of life today, we are unlikely to succeed promoting green, domestically or worldwide. In today’s economy, businesses as well as countries have to be financially sustainable before they are likely to even consider attempting to become environmentally sustainable.

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Oxigen and Virgin racing hit the track

Virgin Racing are up and running in Jerez. The team and car arrived here yesterday, closely followed by some brand new parts which have been developed from last week’s initial shakedown data. To maximise the benefit of these new parts, the team pushed on through the night and into the morning to ensure that the car was fully updated for today. Unfortunately, the downtime meant that the team missed out on the one hour of early dry running. Timo Glock eventually took to a wet circuit at 13.10 local time for his opening lap and the team limited his running to a further two very short runs to ensure the car is ready for a full day of testing tomorrow. Lucas waited patiently in the wings, keeping a close eye on the data and a close ear on Timo’s radio feedback. He will take over the reins of the VR-01 on Friday for his own two-day programme.

Nick Wirth, Virgin Racing’s Technical Director, said: “We’ve completed some short installation runs today without any car-related issues. A few new parts arrived here quite late yesterday and so the only option was for everyone to work through the night. Sadly, that meant that we missed the dry window and we are not at a point where it is worth risking the car in the wet running. As a result, we’ve kept things sensible and worked through the job list to prepare the car for tomorrow. Timo’s early feedback has been as it was at Silverstone and so we all look forward to a solid day of running tomorrow. It’s ironic that the weather was better on the Friday at Silverstone than it has been for most of today!”

Timo Glock said: “It’s great to be back in the car and to have the chance to open it up a bit around a few full laps of the track. It’s early days but I’m encouraged by what I’ve experienced so far and in particular the fact that we haven’t had any reliability issues on the first day of our first proper test. A big ‘thank you’ to all the guys for working through the night. I hope they can get some sleep tonight so we can all start to put the car through its paces tomorrow.”

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HELP CLIMATE CHANGE 2010

Not only has the new Virgin Racing team opted for a mix of youth and experience, Latin and Teutonic, for its maiden Formula One season in 2010, but it has also succeeded in attracting a varied blend of partners to accompany it on the journey.

Heading the list is Marussia, Russia’s first bespoke sportscar producer, which sees F1 as the perfect stage for its high performance products, while FxPro Financial Services, Nexa Autocolor and Oxigen were all also revealed at the former Manor Grand Prix team’s official launch in London.

Created in 2007 by company president Nikolay Fomenko and ideologist Yefim Ostrovsky, Marussia’s philosophy for its cars is ‘innovation built on reliability’, and the group has seen its concept morph into reality with the launch at the Frankfurt Auto Fair in 2009 of its B1 and B2 models, which heralded the appearance of the first Russian sports car.

“Welcoming Marussia to the Virgin Racing family is a reflection of the truly global nature of our partners,” Virgin Racing CEO Alex Tai commented, “We are delighted to have Russia’s first high performance sports car producer as a partner of both the team and Cosworth. The technical innovation and their visionary approach is completely in tune with our values at Virgin.”

In a multi-year deal, Marussia will enjoy major on-car, driver and team branding, but also enters into a relationship with Virgin’s engine partner Cosworth, which will supply the Russians with drivetrains and other engineering services over a multi-year partnership. To reflect this dynamic partnership, Marussia is developing a racing version of its car using F1 technologies such as advanced electronics and aerodynamic design.

“We are very proud to partner with Virgin Racing which, like us, is a young, innovative group of people dedicated to excellence and thinking outside the box,” Fomenko concluded, “F1 is the pinnacle of motor sport and the perfect environment to constantly strive for the best.”

FxPro will also have a significant presence on the car, drivers’ clothing and team branding, but also gains a strong and growing relationship with Virgin group companies as part of its deal with the team. Founded in 2006 by chairman Denis Sukhotin, FxPro is a leading global company competing in the provision of services for online trading of foreign exchange markets and other derivatives, with a presence in the UK, the Russian Federation, Austria, France, Greece and Cyprus.

“I’m absolutely delighted that FxPro is sponsoring Virgin Racing in F1,” Sukhotin said, “The fact that both of our companies are passionate about achieving great results for our clients on a global basis, and share dynamic values and principles of delivering excellence and care in our services, makes me strongly believe that Virgin Racing will be a success as a brand as well as on the track. It is a pleasure for FxPro to be working in partnership with the Virgin Racing team.”

Automotive refinish products expert Nexa Autocolor will have lesser exposure via branding but will provide the team with the latest paint ’solutions’, while Oxigen Investments will have a major namecheck as it underlines Virgin boss Richard Branson’s personal commitment to the environment and sustainability.

“Sustainability is one of Virgin’s major commitments, both through our business model and also via our long-term commitment to all our communities throughout the world,” Tai stressed, “Oxigen’s philosophy of investment in sustained forests is exactly the type of company model we support and admire. We will be working closely together to define our strategic alliance in this important field and also to identify joint projects. This is a unique model which is new to sports sponsorship.”

Formed in 2004 by Guy and Inga Conroy, Oxigen offers ‘forestry with a difference’ by creating sustainable forests for generations to come, and hopes to benefit from what it feels is a unique presence in F1.

“F1 represents the global media platform that will position our brand on an international stage and it was an easy decision to partner with the Virgin Racing team given Virgin’s stated position on the environment and the exciting team that has been put together to challenge for F1 honours,” Conroy reasoned, “We look forward to the start of the new F1 season and to working with the team to create awareness and positioning for our brand and to developing new business opportunities.”

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OXIGEN INVESTMENTS

Forestry has hit the headlines this week as Prince Charles was speaking at the climate talks in Copenhagen,  at the invitation of the Danish government.  The Prince came on behalf of The Prince’s Rainforests Project, which he set up in 2007 to curb deforestation.  The entire speech is quoted below but as far as investments into forestry are concerned he did make specific reference to the need to use degraded land for forestry to protect the worlds natural forests and for the institutional investment funds/ pension funds to have aclear commitment to set climate solutions at the heart of their investment processes.

For those that haven’t read the contents of the speech,  the entire text is below but I have highlighted the sections related to forestry,  but also was mindful to avoid distorting the speech by selectively choosing parts of it.

“Prime minister, secretary-general, ministers, ladies and gentlemen:

I am most grateful for your kind invitation to address this crucially important international gathering.

We live in times of great consequence and, therefore, of great opportunity.

With issues of such magnitude, it is easy to focus solely on the challenges, the worst-case scenarios, the what-ifs of failure.

But take a moment to consider the opportunities if we succeed. Imagine a healthier, safer and more sustainable, economically robust world. Because if we share in that vision, we can share the will to action that is now required.

Over more than three decades, I have been privileged to talk with some of the world’s most eminent experts on climate change and environmental issues and to listen to the wisdom of some of the world’s indigenous people.

The conclusion I draw is that the future of mankind can be assured only if we rediscover ways in which to live as a part of nature, not apart from her.

For the grim reality is that our planet has reached a point of crisis and we have only seven years before we lose the levers of control.

As the President of Gabon said at a meeting I hosted last month: ‘The door to our future is closing…’

This, I fear, is not an overstatement. For climate change is a risk-multiplier. It has the potential to take all the other critical issues we face as a global community and transform their severity into a cataclysm.

Reducing poverty, increasing food production, combating terrorism and sustaining economic development are all vital priorities, but it is increasingly clear how rapid climate change will make them even more difficult to address.

Furthermore, because climate change is intimately connected with our systemic, unsustainable consumption of natural resources, any decline in the ecological resilience of one resource base or ecosystem increases the fragility of the whole.

We appear intent upon consuming the planet. It seems likely, on current patterns of use, that our global fisheries will collapse by 2050 and, already, fresh water is becoming scarcer, placing global food security at ever greater hazard.

In the last 50 years we have degraded 30% of global topsoil and destroyed 30% of the world’s rainforests.

All of these issues are linked to each other and to climate change – a truly vicious circle – and the climate crisis is the mirror in which we see reflected the combined ecological impact of our industrialised age.

However, it is these links, together with our common humanity and the unprecedented connections of today’s global community, which might, perhaps, provide us with a solution.

Moreover, in our increasingly precarious situation – on a small, unique and precious planet – this is not a problem resolvable in terms of ‘them and us’.

For when it comes to the air we breathe and the water we drink, there are no national boundaries. We all depend on each other – and, crucially, on each other’s actions – for our weather, our food, our water and our energy. These are the ‘tectonic plates’ on which the peace and stability of the international community rest.

The inescapable conclusion, therefore, is that a partial solution to climate change is no solution at all. It must be inclusive and it must be a comprehensive approach – one that strengthens the resilience of our ecosystems. Crucially, it must be embraced by the public, private and NGO sectors, as well as by local communities and indigenous people, while also encouraging individual responsibility.

One example that has been high on my agenda for the last two years is that of tropical rainforests.

These ecosystems have been described as the planet’s lifebelt, and with good reason. Not only do they harbour about half of our terrestrial biodiversity and generate much of the rainfall that is vital for farming, they also absorb and hold vast quantities of carbon that would otherwise be in the atmosphere.

Unfortunately, as you know better than I, the forests are being cleared at a terrifying rate.

The simple truth is that without a solution to tropical deforestation there is no solution to climate change. That is why I established a Rainforests Project to try to promote a consensus on how tropical deforestation might be significantly reduced.

In early April, I was able to host a meeting of heads of state and government at which it was agreed to establish an informal working group to look at this issue.

As it turns out, it seems the quickest and most cost-effective way to buy time in the battle against catastrophic climate change is to find a way to make the trees worth more alive than dead.

The project has been exploring the drivers of deforestation and how innovative financing mechanisms could provide rainforest nations with financial rewards for positive performance.

One example of such a performance-based approach is the recent agreement between Guyana and Norway.

The project is also working with the World Bank on an emergency package to stimulate private sector finance for rainforest nations.

It is critical to find ways to prevent forests being converted to agriculture.
I have been heartened by my conversations with some of the world’s largest agri-businesses, which have told me that, through more effective use of vast areas of degraded land, we could feed and fuel a growing population and keep the forests.

But, ladies and gentlemen, it must be genuinely sustainable agriculture that helps to empower local communities and small farmers.

We thereby create a truly virtuous, not a vicious, circle and one, because of its understanding of the relationship between agriculture and forestry, that can only improve the lives of many of the poorest people on the planet while simultaneously benefiting nature.

It also builds what seems to me to be the absolutely critical chain which links ecosystem resilience, adaptive capacity, poverty reduction and sustained economic development.

This is the chain that we have broken … And it is the chain that we must now re-make.

The need fully to engage the private sector reflects not only the growing determination of business to act in a sustainable way but, crucially, its determination to listen to customers.

And what customers are saying ever more loudly is that they want their investment choices to make a positive difference to climate change.

One practical result of my work with the private sector on corporate, social and environmental responsibility for the past 25 years is that growing numbers of pension funds have made a commitment to set climate solutions at the heart of their long-term investment decision-making.

To ensure a large-scale deployment of capital, these pension funds need clear long-term policies to be agreed here this week.

This request is supported by the 191 financial institutions with assets of over $13tr which signed the International Investor Statement on Climate Change.

A further practical contribution is a statement by the international Corporate Leaders Group, of which I am patron – comprising over 900 of the world’s most prominent companies drawn from more than 63 countries, including all the G20 members – on the significant business opportunities which a robust, effective and equitable global climate agreement could deliver.

In helping to facilitate these initiatives, my simple aim has been to show that we can all make a difference if we are determined to do so. Above all, I am convinced it is these kinds of global partnerships – between government, business, NGOs, civil society and even individuals – that will provide the global solutions needed to secure our future.

Subsequent inflows of private sector investment would do much to reinforce the credibility of all those, particularly in the poorest countries, who have had the courage to believe in the positive outcome of this meeting.

Several of their leaders, while being only too aware of the immediate economic benefits of monetising their countries’ natural capital, have still chosen to follow the difficult path of turning their economies towards sustainable development.

Such visionary people have a vital role to play in helping the world to find the strength needed to address its problems. But they desperately need our support, for without it they may not have a second chance.

Surely now, then, is the time to recognise that we cannot have capitalism without nature’s capital – we cannot sustain our human economy without sustaining nature’s economy?

I know that so very many of you here today have been negotiating the unbelievably complex details of a potential agreement for a very, very long time, and you must be profoundly weary.

But this is an historic moment. I can only appeal to you to listen to the cries of those who are already suffering from the impact of climate change.

Just as mankind had the power to push the world to the brink so, too, do we have the power to bring it back into balance.

You have been called to positions of responsibility at this critical time. The eyes of the world are upon you and it is no understatement to say that, with your signatures, you can write our future …

One final thought … As our planet’s life-support system begins to fail and our very survival as a species is brought into question, remember that our children and grandchildren will ask not what our generation said, but what it did. Let us give an answer, then, of which we can be proud

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Carbon Sequestration

Socio-economic

Climate change is rapidly becoming a major socio-economic issue as governments realize the impact of greenhouse gas emissions and endeavor to balance the demands of economic development and sustainability. The Fund will seek to benefit from this theme, initially in two areas:

Carbon Sequestration

It is anticipated that carbon sequestration will play a more important role in any subsequent environmental treaty post the Kyoto Protocol. Trees have good sequestration capacity and so can be expected to be used more in carbon offset programmes with the resultant improvement in forest property values.

Social Responsibility

The introduction of sustainable commercial plantations provides communities with a viable alternative to illegal logging practices. The employment of local labour for plantations and paying well above the annual wage rate in the countries in which the Fund’s investments will reside is a key driver. Many of the plantations in which the will Fund invest will provide homes to their workers, families and the wider community. The Fund will invest in purpose built village communities within the estates it manages, including schools and medical facilities. Such investment will, the Investment Manager believes provide employees and their families with the social and financial security they require to remove the need to get involved in illegal logging to sustain themselves. As a result the local labour and their families become custodians of the forests for future generations whilst benefiting the global environment by protecting their forests.

It is the policy of the Fund to minimise the use of pesticides and chemicals on the plantations it will acquire, and only to use them if there is no alternative. In addition the Fund intends to operates a system of agroforestry on its plantations, which means putting crops in between the trees during the early years of their growth. This process introduces nutrients into the soil, which in turn helps the trees develop whilst also providing revenue and food for employees. This method is now widely utilised in ethical plantations all round the world. The crops grown will include peppers, chillies, glyricidia (a leaf protein) and carrots. All surplus food crops will be sold in the local markets, providing extra income for the plantation workers.

Land prices

It is anticipated that the underlying land value will represent a small percentage of the overall forestry investments made by the Fund, but upon disposal a return may be realised.

Marketing Objective

World consumption of tropical hardwoods has multiplied nearly 25 times in the last four decades. More than 100 billion board feet of tropical hardwoods are now being consumed each year. At the same time, rainforests are being destroyed at the rate of 35 to 50 million acres each year, and along with them, the world’s supply of tropical hardwoods as a result.  The Fund predicts prices of tropical hardwoods will continue to rise. The demand for tropical hardwood alone has increased over 2500% in the last 40 years. China’s demand has increased 16 fold over the last 12 years alone.

The Investment Manager believes that proven forestry methods can be enhanced by cutting edge scientific techniques and that managed forestry is a science that can increase the productivity of land. The process involves the application of scientific knowledge and technology across the complete lifespan of the forestry. Site selection and preparation, growth and choice of saplings, planting, fertilization watering, pruning, ground maintenance, thinning and harvest have all benefited enormously from research and experience. Investments will be monitored and cared for by the team of Foresters.

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Virgin f1 team partner with Oxigen Investments plc

The term green money could have been coined for Oxigen Investments, the London based green investment company that specialises in planting and harvesting the finest species of exotic tropical hardwoods in the rainforests of Brazil, Costa Rica and Malaysia.

So why would a tree planting and harvesting company want to partner with Virgin Racing? Simple, Oxigen want to draw attention from consumers and independent financial advisors to Oxigen’s unique investment model and they figured that exposure of their brand to 575m TV viewers every other week would probably be a useful start. Who says money doesn’t grow on trees?

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VIRGIN AND OXIGEN BRING SUSTAINABILITY TO FORMULA ONE


London, 15 December 2009.  Virgin is committed to the environment and sustainability so it is a great pleasure to welcome Oxigen Investments as a partner of the new Virgin Racing Team, which was launched in London today by Sir Richard Branson.

Oxigen was formed in 2004 by Guy Conroy, who is also the Managing Director. It offers clients the opportunity to buy trees on commercial plantations in tropical countries. However, this is forestry with a difference. It’s sustainable and environmentally friendly.

On Oxigen’s plantations, trees that have been cut down are replaced by new ones on the same land, so creating sustainable forests for generations to come.

Oxigen Investments plc has a substantial customer base located throughout the world, including individual private clients, corporate investment clients and corporate clients investing for Carbon Credit certification.

Oxigen will have major on-car, driver and team branding and a major and unique presence in Formula One.

Alex Tai, Chief Executive Officer, Virgin Racing, reinformed Virgin’s commitment to sustainability “Sustainability is one of Virgin’s major commitments both through our business model and also via our long-term commitment to all our communities throughout the world. Oxigen’s philosophy of investment in sustained forests is exactly the type of company model we support and admire. We will be working closely together to define our strategic alliance in this important field and also to identify joint projects.  This is a unique sponsorship model which is new to sports sponsorship.”

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Ethanol industry owes much to massive investment

Brazil’s successful sugarcane ethanol industry owes much to massive investment in infrastructure and research, reports Carla Almeida.

Thirty years ago, when one litre of ethanol was worth three times more than one litre of gasoline, most nations would not have considered investing in it as a biofuel. But Brazil took this path, and now produces the cheapest ethanol in the world.

Brazil’s favourable conditions and tradition for culturing sugarcane — the most efficient raw material for the production of ethanol — were essential for developing the sector.

But it was the government’s massive investment in infrastructure and research between 1975 and 1989 that allowed the country to become a leader in the ethanol market.

Pioneering experience

Brazil’s ethanol industry started in the 1930s. With more sugar than it could use, the government directed sugarcane into ethanol production and made the addition of ethanol to gasoline compulsory.

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But it was in 1973 that the industry really progressed. An international oil crisis doubled Brazil’s expenditure on oil imports and the government was forced to consider alternative sources of energy to decrease its dependency and spending on fossil fuels.

With that in mind, the government launched the National Alcohol Programme (Pro-Álcool) in 1975 to increase ethanol production as a substitute for gasoline.

It invested in increasing agricultural production, modernising and expanding distilleries, and establishing new production plants. It also introduced subsidies to lower prices and reduced taxes for ethanol producers.

Over the next 15 years, production of ethanol increased hugely from 0.6 billion litres in 1975 to 11 billion litres in 1990.

During the first phase of the programme in 1975—78, one part of ethanol was added to four parts of gasoline and there was an additional processing stage to remove water from the fuel.

By 1979, production had been streamlined to focus on hydrous ethanol (containing five per cent water) that could be used in cars fuelled entirely by ethanol.

Researchers at the General Command for Aerospace Technology, the national research centre for aviation and space flight located in São Paulo, developed alloys to protect the internal parts of gasoline-powered engines and fuel tanks from corrosion by ethanol. At the programme’s peak in 1986—89, 90 per cent of all new vehicles sold in the domestic market were ethanol-fuelled.

Roberto Schaeffer, professor of energy management and policy at the Federal University of Rio de Janeiro, says creating the market was a “huge national effort” requiring a lot of financial investment. “The government was criticised at that time, but the fact is that it was a success,” he adds.

Science behind the achievement

Behind the success of the programme were important scientific and technological advances in agriculture and industry.

“The production of 40 tonnes of sugarcane per hectare was more than doubled,” says Schaeffer. “It was a unique experience, in which the government and the private sector together invested in research and improvement of a particular product.”

Key developments in agricultural research came from the Campinas Agronomic Institute, which has been working on sugarcane improvements since 1933, and the School of Agriculture Luiz de Queiroz at the University of Sao Paulo.

Using traditional breeding techniques, researchers produced varieties adapted to different soil and climate conditions, with shorter production cycles, better yields, and tolerance to water scarcity and pests (such as the devastating fungus that caused sugarcane rust in the 1980s).

“Researchers working in the area anticipated the appearance of diseases,” says Oscar Braunbeck, professor of agricultural engineering at Campinas State University. “If there weren’t genetically improved varieties of sugarcane, it could have been a huge problem for the sector.”

In production, new grinding systems were developed and the fermentation process adapted to use different microorganisms and enzymes to produce more ethanol faster.

The Sugarcane Technology Centre, a privately-funded research institute in São Paulo, was key to improving ethanol production technology, having invested about US$20 million a year in research at the peak of the programme.

A problem at the time was waste. The vinasse, a corrosive liquid byproduct of ethanol distillation, was dumped in rivers, causing environmental damage. But the vinasse was found to be a good fertiliser, and in the 1980s Braunbeck and a team at the Sugarcane Technology Centre developed a transportation system, involving a combination of trucks, pipes and ducts, to carry it from the distilleries to the fields.

Researchers at the centre and other institutions also found ways to use leftover sugarcane fibre, known as the bagasse, to produce energy, building on existing methods of burning the bagasse to power steam turbines for electricity generation.

They developed cauldrons under greater pressure so more energy could be produced, allowing many ethanol plants to become autonomous in terms of energy. This contributed significantly to keeping ethanol production costs low.

New technologies, new demand

The infrastructure developed and advances made enabled the programme to survive a turbulent period at the end of the 1980s, when the government cut public investment after a crash in the price of oil, and a sugar supply crisis led to sugarcane resources being diverted to sugar production over ethanol. Although this had a short-term impact, demand remained high and almost five million ethanol-fuel cars were in circulation by the 1990s.

Today, Brazil is the second biggest producer of ethanol in the world (20 billion litres) after the United States (24 billion litres). Close to 80 per cent of this is for the domestic market — the fuel used in 45 per cent of Brazilian vehicles is ethanol.

Part of the demand is down to the success of flex-fuel cars, which can run on gasoline, ethanol or a mixture of both. The cars were developed by engineers at Bosch, a German company, in São Paulo and released in 2003. The engine works differently depending on the quantity of oxygen produced by the type of fuel burned, which is measured by a sensor.

Flex-fuel cars renewed consumer interest in ethanol and intensified demand for ethanol biofuel. According to Brazil’s National Association of Vehicle Manufacturers, Anfavea, 85 per cent of cars — some four million vehicles — sold in Brazil today are flex-fuel.

“There has been another jump in the demand for ethanol,” says Alfred Szwarc, a consultant for the Sugarcane Industry Union. “Flex-fuel cars increase consumption and we are observing a growth in this market.”

The success of flex-fuel and the need to reduce carbon emissions have inspired a search for new applications of ethanol. Researchers at the Delphi Technology Centre in Sao Paulo have developed a fuel system for motorcycles that can also use ethanol—gasoline blends in any proportion.

The first ethanol-powered bus, developed at University of Sao Paulo, will undergo road tests in December to test its economic viability. And Brazilian aviation company Embraer has had an ethanol-fuelled agriculture monoplane in use since 2004.

“During the last 30 years, what we did was to become professional in the use of conventional [ethanol] technology,” says Braunbeck. “From now on, we need to develop new technologies to keep our leadership in the sector.”

New challenges

With international demand for renewable sources on the rise, Brazil has many challenges to face if it is to continue at the forefront of the ethanol market. One is to increase its already significant production without environmental or social damage.

Producing ethanol from sugarcane bagasse and straw would be a step in the right direction. These components are rich in cellulose and turning these into ethanol would allow the entire sugarcane biomass

to be used with no wastage. One tonne of bagasse can produce 186 litres of ethanol. But there are doubts over the economic viability of the process, which requires more water and produces more polluting byproducts like the vinasse.

A large production of ethanol, however, is no guarantee of market superiority for Brazil or the success of the ethanol industry internationally.

Brazil is offering its expertise to nations worldwide, especially developing countries that could produce biofuels but still depend on oil.

Brazil also hopes to expand its ethanol market. “It is a good deal for both sides,” says Schaeffer. “For a Caribbean or African country, it is better to import technology from Brazil and learn to produce their own goods than to keep importing oil from the Middle East.”

“We have the equipment and the administrative capacity to make big plants work and the technology in both the industrial and the agricultural phase,” says José Roberto Moreira, a University of Sao Paulo researcher and advisor at its National Centre of Reference in Biomass. “It is easy to start an ethanol project in another country with this know-how,” he says.

Many countries have already shown an interest in the trade. This year Brazil has signed agreements with countries in Africa, the Caribbean and Latin America.

Most of these agreements involve transfer of Brazil’s ethanol production technology. In the west African country of Benin, for example, Brazil will use its expertise to help develop production capacity.

In Angola, Angolan and Brazilian oil companies are to build a facility to produce sugar, bioenergy and ethanol from sugarcane. The facility is expected to produce 150 million tons of sugar, 50 million litres of alcohol and 140 megawatts of electricity per year. The construction is scheduled to begin in the first semester of 2008 and the joint venture involves an investment of US$200 million.

There is clearly the hope of establishing an ethanol trade with these countries, says Szwarc. “But even if this doesn’t happen, we are at least creating the proper conditions to consolidate a stable market for ethanol and to expand it in the future.”

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Oxigen Investments plc on the Brazilian Community

  • Oxigen on the Brazilian Community

As the World’s fifth most populous country and one of the largest developing economies, Brazil matters a great deal to the international community and is a nation whose voice is clearly heard. It has grown even more important over the last few years and for Oxigen Investments as a ‘green’ business it holds significant relevance to us which is why I am honoured to be able to speak to you today about our work.

Brazil is the holder of a large proportion of the world’s rainforest including the Amazon which I am sure you will know is often referred to as the lungs of the world. Ultimately that means Brazil is at the forefront of the work to protect the global environment and to mitigate the potentially disastrous effects of climate change. Carlos Nobre[1] has termed a phrase that Brazil will be an ‘environmental power of the future’ which means there is, and will continue to be, tremendous amounts of

international focus on your country as well as other nations in South America, Africa and Asia.

Oxigen plc understands that the environment is a complex political issue, partly due to its commercial significance, but also to conflicting pressures resulting from poverty, social inequality and developmental needs. We also understand that the rainforests belong to Brazil and its care can be trusted with the nation. After all Brazil is one of the more environmentally advanced countries with 45% of its energy coming from renewable sources as well as the recent announcement that you will be making a voluntary reduction of carbon emissions of between 38% and 42% by 2020.[2]

Where we feel we can assist Brazil is in the social development and creation of strong communities in which the Brazilian people are able to look after and use their resources through our work on sustainable forestry and agro-forestry. The need to combat climate change alongside

the demand for hardwood means the rainforests have contradictory demands which Oxigen can address.

Through the schemes we have for conservation, quick growth based on tissue culture and careful harvesting, we can make it more valuable than ever before but not only in a fiscal sense. The projects which Oxigen undertake can not only improve the quality of lives for people internationally by reducing carbon emissions but also those closest to this resource; the local Brazilians. Their wellbeing, education and wealth can be increased significantly.

We have the workable methods as to how we can help support the rainforest and communities around them through social projects which are supported by market mechanisms and offer a system of payment for the eco-services. Ultimately, for our vision to work it must derive from, and reflect the needs of those whose livelihoods depend on these forests and who know it best.

The people who live around the forestry are employed by

Oxigen to manage it and see individual projects through from start to finish. We pay above the annual wage rate in all countries in which we operate and staff work eight hour days with ample rest periods. In Brazil we provide them and their families with free land to grow their own food.

We also recognise that this workforce requires infrastructure to support it going into the future and Oxigen is able to provide a high standard of education and medical support as a model for all plantations.

The medical support will come in the shape of medical centres provided by Oxigen and given to the local communities, depending on the level of government investments at the outset. Oxigen could be looking at funding the daily costs of the primary medical care centre to support all the needs of the community ensuring physical well-being.

The business works best for us with a knowledgeable workforce that understands the importance of the role they

play and for Brazil, lifting educational attainment is good for the nation’s future.

Therefore, on the education front, private schools will be built & sponsored by Oxigen with 100% bursaries. We will be looking at giving the local community the same level of education as private schools in Brazil but for free. This will assist in bringing the level of education up in these areas significantly. The school curriculum will be based on the regulations of MEC (Ministerio da Educacao e Cultura) plus some extra curricular activities that are linked with ecology & agro forestry so they have knowledge of the forest which surrounds them.

We believe these initiatives can really bring benefits to rainforest management. The way to ensure these social projects are undertaken is for the state to provide land and structural irrigation engineering in exchange for investment and general benefits to the local community.  A working partnership would allow us to bring this vision into practice

with the result being mutually beneficial, not only to Oxigen and Brazil in this case or the state of Piaui , but also to the wider world. We want to demonstrate that business can work alongside the local community and the environment and we feel that we have found the model to do this.

Thank you for taking the time to listen to my brief outline and I hope that you will feel as positively about this we do and will be able to support us and work with us for the future.

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