This story was published via The Medill News Service on January 16, 2008. It was written for a class while Molly was attending Northwestern’s Medill School of Journalism.
Jatropha curcas isn’t much to look at. It’s a scrubby, shrubby tree generally used as a hedge to protect food crops. It repels animals and if ingested, can make humans sick.
But Archer Daniels Midland Co. sees value in the plant’s seeds, which contain oil that can be converted to biodiesel fuel. The company announced a partnership last week with Bayer CropScience AG and Daimler AG to explore the plant’s potential.
“I think ADM has made a lot of transformations over the last few years. They’ve really taken a lot of steps to invest in ethanol, renewable energy… and they’re trying to answer America’s energy problems,” said Ann Gilpin, equity analyst at Morningstar Inc.
But Gilpin said jatropha is unlikely to significantly impact the biodiesel industry or ADM’s bottom line in the near future.
Perhaps jatropha’s biggest selling point is it can grow in poor soil, so producing the weed would not necessarily take away from other farmland. This could make it easier for farmers to cash in if jatropha were to catch on.
“It’s technically considered a weed in most parts of the world,” said William Manley, chairman and CEO of ALTEN Industries Inc., a Baltimore-based alternative energy development company. “It is a perennial. It grows in crummy conditions in semi-arid regions. It only requires about 600 mm of rainfall to bloom and generate seed. It’s inedible, and it will grow on degraded farmland.”
ALTEN is currently in negotiations for a contract to grow jatropha in Brazil.
European companies, most notably D1 Oils PLC in the U.K., have been growing plantations of jatropha for years. Japanese fighter pilots even used it in World War II when oil for their engines was in low supply.
Proponents of the weed tout its potential positive impacts on the global economy. Jatropha grows year-round and the trees – which can live up to 30 years – are not damaged during oil production.
Manley said ADM’s entrance into the jatropha business makes sense following a similar move by other energy companies. In 2006, BP PLC began a $9.4 million project in India to further explore the plant’s potential.
But some analysts say the weed that is putting down roots in the alternative energy industry might not deliver.
“My prediction is that it’s not going to have really wide-scale success. It’s not really going to catch on in areas that are used to profitable agriculture production,” said Elaine Kub, commodity market analyst for DTN.
“It may have more success in developing countries that can’t afford really to be buying expensive edible oils and using them for biodiesel,” she added.
Jatropha is harvested by hand and requires different treatment than other biofuels.
“It can’t be handled in the same tankers, it’s difficult to clean out, it’s just a different product,” Kub said. “It’s not a perfect substitute for other oils that are usually used for biodiesel now.”
Gilpin also expressed some doubts. “The potential energy here is enormous,” she said. “But, ADM has their hand in just about everything. They’re active in a million projects, and I don’t think this one will affect ADM strongly.”