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15 February, 2006 - 09:59 By Staff Reporter

Region a prime target in biofuels venture

The UK’s first bioethanol development firm is scouting the East of England for new refinery sites as it ramps up the race to dominate the UK’s biofuel industry following a new collaboration with Cambridgeshire farming cooperative, Fengrain.

The UK’s first bioethanol development firm is scouting the East of England for new refinery sites as it ramps up the race to dominate the UK’s biofuel industry following a new collaboration with Cambridgeshire farming cooperative, Fengrain.

Green Spirit Fuels (GSF) has already been granted permission to build a £60 million grain bioethanol plant in Somerset – another UK first – and plans to follow it up with the roll-out of several other plants over the next few years.

The region is a highly attractive venue for grain bioethanol plants because the large amount of wheat already grown and distributed in the area provides a ready-made platform for the nascent industry.

This is backed up by the partnership between Fengrain and GSF’s parent firm Wessex Grain, which will play a key role in the development of the bioethanol industry supply chain needed to underpin the growing uptake of the wheat-based biofuel.

Along with the Somerset plant the alliance places the new team at the fore of the bioethanol market in the UK where it claims to have stolen a march on the country’s biggest grain organisations.

Fengrain chief executive, Mark Isaacson, said: "Nobody guessed the first plant would be built by Green Spirit Fuels, which is only a start-up. Sometimes these opportunities are taken by individuals that do not have to jump through hoops to get things done."

John Clarke, Fengrain’s chairman, said: "We operate in increasingly competitive markets and this will increase our position of strength, while retaining the benefits of being a strong regional company, serving the interests of our members."

The Fengrain and Wessex alliance will focus on the development of the supply infrastructure for the nascent grain biofuel industry and the two will share specialist skills and seek areas of synergy in logistics, IT and risk management.

Isaacson said: "We want to put in place mechanisms that will help the Wessex venture in its infancy, allow it to manage the risks of supplying wheat to the new plant by offering long term contracts that hedge the risk."

The £60m Somerset plant, which incorporates a state-of-the-art Combined Heat and Power (CHP) unit, will use wheat as its number one grain, a model GSF will replicate around the country.

GSF managing director, Malcolm Shepherd, said: "GSF intends to have several plants across the UK operating over the next five to eight years and will need hundreds of thousands of tonnes of grain and will need supply to be secured."

Shepherd will not yet specify the locations being studied for the new plants, but the East of England is almost a certainty.

He said: "We have a handle on several sites. They are likely to be built at the leading wheat-growing areas in the UK: the East of England, East Midlands and South."

Isaacson added: "GSF is actively looking in East Anglia and are confident plants will be built in this area because of the close location to the raw material supply. This part of the world has strong potential."

Shepherd sees a large scope for growth in the industry and will be cropping the first harvest for the new plant in autumn 2007.

He said: "Supply agreements are being negotiated now. Main buyers will be oil companies and ethanol traders and much of the bioethanol will end up in fuel blends in petrol forecourts.

"The Government will bring in an obligation for use of biofuels in 2008. At the moment the limit set by the EU is five per cent, but that is now being looked at and may be permitted to reach 10 per cent.

"Just five per cent needs one million tonnes of ethanol each year, which is the equivalent to the output of 10 plants like ours."

Fengrain was launched in 1972 and has become the leading farmer-owned grain marketing business in the East of England. Between them, Fengrain and Wessex Grain trade around 1.3 million tonnes of first-hand grain every year.

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