India and China are catching up fast with developed nations as attractive destinations for investors looking for the growth opportunities in the Biofuels segment, according to a study released by global consultant, Ernst & Young.
China moved four places to the 7th position and India by one place to 10th in the global ranking called the Biofuels Country Attractiveness Indices, for the last quarter of 2007. Thailand too has moved up by 2 places to share the 7th spot with China in the All Biofuels Index.
The list is headed by the US, followed by Brazil, Germany and France. The Biofuels Country Attractiveness Indices ranks countries every quarter on the basis of their attractiveness for investments in biologically derived renewable fuels incorporating both ethanol and biodiesel.
The report, released in London on March 20, stated that the US remained at the top of the All Fuels Index after a major, long-term policy boos in the form of the Energy Independence and Security Act that has set a goal to increase biofuels four times from the current levels by 2022.
India was No.10 with the Union Budget measures such as cut in central excise on ethanol boosting the attractiveness of the sector.
Despite government restrictions on foreign investments in the manufacture of ethanol in China, mainly to cushion the rising food prices due to diversion of grains used to make ethanol, the country has attracted more investments in the sector.
In Thailand, the government has amended its target for the 2011 renewable energy proportion from 11 to 14 per cent.
Another Asian major, Philippines is also becoming a major with the recent government allotment of over 700,000 hectares of farmland for the cultivation of biofuels feedstock. At least 15 foreign and domestic investors have used the opportunity in Philippines in recent months. The investors include Abengoa Bioenergy, Cie Automotive and Green Fuel Corporation.
In other major actions in the last quarter of 2007, China Grand Forestry Resources, an ecological forestry company, has announced its intention to acquire biodiesel and jatropha maker, Shenyu New Energy for $ 820 million. Another energy giant, PetroChina acquired a 55 percent stake in Henan Tinaguan Group, one of the four exclusive fuel ethanol producers in China.
E& Y said Brazil was No.2 for stimulating foreign investments in the sector from around the world. Prominent investors include India's Praj Industries, Portugese Petrogal Biodiesel, Japanese Toyota Tsusho and US companies, Rodman and Renshaw. Germany remained attractive for developing a biofuels roadmap to double its usage to 10 percent by 2010 and 20 percent by 2020.
France dropped one place to No. 4 from the previous quarter's ranking due to a government decision to reverse “There is immense potential for innovative biofuel projects in France: we are the second-largest biofuel consuming country in the EU, and consumption is up by nearly 63 percent," said Philippe Favre, President of the Invest in France Agency.
Growth in this sector is being driven by special initiatives, such as the "Grenelle de l'environment" launched by the French government, aimed at driving clean energy and reducing CO2 emissions. Transportation is also pushing the market forward, with the French National Road Freight Federation (FNTR) planning to increase biofuel use for freight vehicles and major automobile manufacturers producing more and more clean vehicles that run on biofuels.
'Emerging Asian and South American biofuels markets such as China, Thailand and Colombia are gaining in attractiveness to investors over established European markets such as the UK. In Europe, the industry continues to be subject to a lack of market certainty and consequent stagnation, with France being particularly affected in the last quarter of 2007,' wrote E&Y's Jonathan Johns in the report.