T he Inter American Development Bank (IDB) is developing what it calls a 'Biofuels Sustainability Scorecard' that it will use as a guide to choose energy projects to finance.

Under that project, the IDB has already earmarked US$269 million in loan financing for three ethanol plants in Brazil, and will help raise another US$379 million for the project "in the largest biofuel investment ever made by a development bank".

Financing was approved Wednesday by the IDB board.

'Scorecard' targets projects that "won't harm the environment nor the availability of food," said the IDB in a statement announcing the project.

The parameters of the assessment programme are being finalised for posting online by August.

420 million-litre capacity

The three ethanol plants, which will have a combined capacity of 420 million litres of ethanol, are being developed by Companhia Nacional de Aéœcar e çlcool (CNAA), a joint venture formed by Brazilian sugar producer Santelisa Vale, United States private equity firms, and Global Foods, a holding company registered in the Netherlands Antilles.

The equity backers of CNAA - including Carlyle-Riverstone, Goldman Sachs, DiMaio Capital, Discovery Capital and Global Foods - have already put up US$300 million and two of the plants are under construction.

The IDB will provide the loan from its own capital resources, while the other US$379 million is to be syndicated among commercial banks, led by BNP Paribas.

The IDB loan is repayable in 15 years. CNAA's equity partners have put up US$300 million for the project.

"At a time of soaring food and energy prices, it is crucial to develop renewable fuels that don't compete with food crops," said IDB President Luis Alberto Moreno.

"After examining the social, environmental and economic dimensions of these projects for more than a year, we concluded that they will produce clean and sustainable energy and provide quality jobs without impacting food prices in any way."

Scorecard will facilitate assessment of dimensions, such as land, climate, water use and biodiversity, in a potential biofuels project.

"Brazil is blessed with some of the planet's best conditions for efficiently producing ethanol," Moreno added. "But several other Latin American countries also have this potential, and we intend to help them develop biofuel industries that meet the highest social and environmental standards."

The IDB stressed that the plants were being developed in Minas Gerais and Goi's, far from the Amazon.

CNAA will lease property from locals willing to put their lands under sugar cane, the feedstock for Brazilian produced ethanol.

job creation

The IDB anticipates the creation of 4,500 jobs under the project, saying that mechanised harvesters would reap more than 90 per cent of the acreages that will feed raw material to the plants.

The waste from the processed cane, bagasse, will be utlised in a co-generation programme and burned for electricity to be utilised by the three plants, but with surplus to power some 400,000 homes.

The plants are expected to start producing ethanol in September.

Each of the plants will have a cane-crushing capacity of 2.7 million tons per year and a 56 megawatt co-generation plant that will supply electricity to the sugar and ethanol mill and sell excess energy to the Brazilian electricity grid.

"These new loans are part of a comprehensive IDB programme to support the development of renewable energy and energy efficiency in Latin America and the Caribbean." said the bank's statement.

THE PROJECTS

Campina Verde Bioenergy Project

Ituiutaba Bioenergy Project

Itumbiara Bioenergy Project

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TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, JULY 25, 2008