Al Ain gets biodiesel green light

Investors seek to capitalise on demand for both green development and diesel fuel.
The greening of Al Ain: the Jatropha plant will be grown to produce biodiesel at the proposed new plant in Al Ain.
The greening of Al Ain: the Jatropha plant will be grown to produce biodiesel at the proposed new plant in Al Ain.
DUBAI // A group of investors announced yesterday it will build the country's first biodiesel plant near Al Ain and start production next year, seeking to capitalise on the increasing national demand for both green development and diesel fuel.

Biodiesel, which is a modified form of plant oil that can be used in standard diesel engines, has been described alternatively as a renewable, cleaner alternative to fossil fuels and an energy-intensive product blamed for helping to push up global food prices.

The new company, to be called EmBio, will be the first commercial-scale operation to produce biofuels in the GCC. It plans to make the fuel from a wide array of sources, including used cooking oil, as well as buy land to grow jatropha, a hardy weed. Many people believe the weed's seeds will be the source of a new generation of biofuels.

Karim Aly, the co-founder of the company, declined to specify the size of the investment in the project, which will be backed by Daman Investments, but emphasised that EmBio sought initially to sell the biodiesel to a niche market of firms interested in blending it into standard petroleum-based diesel to beef up their green credentials. "Initially, we will be looking at marketing the product to wholesale, heavy diesel users ... for those who want to dampen their ecological footprint," he said.

By some estimates, biodiesel produces 75 per cent less carbon emissions when burnt, and is effectively free of sulphur, which is blamed for some of the most harmful health effects of air pollution.

Wadah Abusin, the company's other co-founder, said it would be "unrealistic" at the outset to expect the firm to have a measurable impact on the country's diesel prices, which have climbed to record levels in Dubai. However, he said it would be "reasonable to assume we'd kick off with [production of] about three million gallons" a year.

The UAE used more than 2.5 million gallons of diesel each day last year, the Ministry of Economy said in a report last month.

Biofuels have become a hot topic in the international energy debate this year because the rapid increase in their production is blamed by many for inflating food prices worldwide. As oil prices have risen in the past two years, governments in many industrialised countries have increased subsidies and targets for production of domestic biofuels to reduce their dependence on imported oil. The sudden increase in demand for commodities has raised prices for basic staples like corn, rice and sugar. At the same time, farmers have boosted the production of crops needed for ethanol, a petrol substitute, and biodiesel.

In addition to growing more corn and rice, governments in developing nations from Nigeria to Malaysia have announced major initiatives to boost production of jatropha and algae, both of which are seen as the source of the next generation of biofuels.

Shehab Gargash, the chief executive of Daman Investments, a fund manager based in the UAE, said that unlike ethanol made from corn, rice or sugar cane, EmBio's biodiesel would be produced from discarded oils and other non-food sources, so it would not increase food prices.

"EmBio is basing its whole premise on using inedible food oils and converting them into diesel," he said. "Therefore, you are not taking anything out of the food chain."

Mr Abusin said the company's plant would be designed to produce biodiesel from a variety of feedstock received from contractors. Eventually, the company may buy land and grow jatropha in the region, he said.

In a recent report, Eckart Woertz, an economist at the Gulf Research Centre in Dubai, raised the possibility that biofuels could one day become a viable renewable energy source for the GCC. He predicted algae would be the chief feedstock for biofuels production.

"Algae, as a third generation biofuel, has considerable potential as it does not compete with food production for fresh water and arable land," he wrote.

Yesterday's announcement was not the region's first investment in biofuels. In April, Dubai Group, an investment arm of Dubai Holding, bought a 30 per cent stake in the largest biodiesel facility in Malaysia, which produces 200,000 tonnes of biodiesel a year from palm oil and jatropha. 

Published: August 31, 2008 04:00 AM


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