-a corporate social responsibility vision for 2028created by the BioCity Team George Marica Olga Georgescu Andrei Jianu
Primary objectives………………………………………………………………slide 3 Why a project on production and use of biofuels…………………………...slide 4 What makes this project unique……………………………………………....slide 5 Groupe Societe Generale and CSR…………………………………………...slide 6 Action plan for “Biofuels for a sustainable development”.………………...slide 7 Promoting biofuels……………………………………………………………..slide 9 Investment financing………………………………………………………….slide 10 Financing ………………………………………………………………………..slide 12 Types of credit…………………………………………………………………..slide 13 Appendix: A vision for biofuels……………………………………………...slide 14 Romanian context………………………………………………...slide 18 Economic analysis of the South-Muntenia region…………….slide 20 SWOT analysis of the South-Muntenia region………………...slide 22 As a conclusion…………………..……………………………………………..slide 24
The benefits for the parties involved in this project and the problems it targets to solve in 20 years time, till 2028, are: - creating new workplaces in agriculture for unoccupied people in rural areas, which involve a better life standard in the region correlated with the preservation of the customs and traditions specific for national identity. - cut down polluting emissions in the atmosphere by creating a biofuel industry which will include fields such as agriculture, transportation, heating, and electricity production. - involving Groupe Societe Generale in a CSR project that will put it in the spot light, will satisfy the need of influencing the world in a good direction by helping at creating workplaces, developing rural areas and cutting down polluting emissions in the atmosphere, all these in a business 2 business approach. So, the aim of Societe Generale to become a benchmark reference in Corporate Social Responsibility, thus affording it a major competitive edge is about to come true.
Groupe Societe Generale should lean on the assertion: “Give a man a fish and he will eat for a
day. Teach a man how to fish and he will eat for a lifetime and he will also buy fishing lines from you for the rest of his life” – paraphrasing Confucius and
Karl Marx
“Human caused climate change is already occurring. Adaptation efforts are already taking place and must be expanded. But adaptation becomes costlier and less effective as the magnitude of climate change grows.”
John P. Holdren- Professor of Environmental Science and Policy in Harvard’s Department of Earth and Planetary Sciences, and Director of the Woods Hole Research Center
Energy is the key in helping Europe and the entire World achieve their objectives for growth, jobs and sustainability. High oil prices put the spotlight on Europe’s increasing dependency on imported energy. The institutional environment does not produce enough incentives for sustainable energy innovations. Faced with the need to reduce greenhouse gas emissions, while at the same time seeking to diversify sources of energy, a re-examination is done in order to see how agriculture can contribute to meeting these challenges. In the EU, transport is responsible for almost one quarter of greenhouse gas emissions. It is therefore essential to find ways of reducing emissions. Biofuels provide the best option in the short to medium term to replace a significant share of fossil fuels. Biofuels are processed from biomass, a renewable resource, and can be readily integrated into fuel supply systems.
The approach and the fact that it is very realistic and can be easily implemented. Approach The project is conceived from particular to general. When we say “particular” we refer to one of the eight development regions in Romania, South Muntenia; the generalization comes with the fact that it can also be implemented in other regions, with similar characteristics, from European countries and all around the world.
Realism and implementation The project is supported on 3 pillars: idea deep analysis of the region involved conclusions and a framework for implementing the project on a large scale That is why it is aimed to draw attention to the problems of sustainable development which can be done by: 1.Developing rural areas with high agricultural potential 2.Rising the standard of living of rural inhabitants 3.Producing and consuming biofuels which will reduce pollution in big cities 4.Involving lenders and governmental institutions which can support the implementation of this project The project is in accordance with the EU Strategy for Biofuels, adopted on 8 February 2006, whose main objectives are: •Reduce greenhouse gas emissions from the transport sector •Diversify fuel supply sources–possible effect on oil price •Further promote biofuels, ensure that their production and use is globally positive for the environment •Prepare for the large-scale use of biofuels by improving their cost-competitiveness, research into “second generation” biofuels, and scaling up demonstration projects •Explore the opportunities for developing countries
• • •
Microfinance
- Supporting start-ups - Loans / credits SD
Responsible / green financing
“Biofuels for a sustainable development”
CO2 Market
Socially Responsible Investment (SRI)
In close relation with the European Commission’s Action Plan in the field of biomass, and with the EU’s Common Agricultural Policy, the agricultural areas in the South Muntenia Region are to provide the necessary biomass for obtaining and refining biofuels. The final product will satisfy the energetic need of Bucharest and the surrounding towns. This action can be financed by Groupe Societe Generale through long-term and short-term loans granted to individuals, local communities and especially associations of 20-200 farmers, thus dividing the risk and increasing the project’s unity. The South Muntenia Region has a significant economic development potential, with a difference between the northern and the southern part of the region. In the north there are significant subsoil resources such as oil and natural gas fields, coal and salt deposits etc., whose processing and marketing can increase the added value in the region. Moreover, in the south of the region, there are wide farming plots of land, which can sustain an agriculture specialized on different types of crops, according to the pedologic conditions in the region. The agricultural potential of the region in general and of its southern side in particular is very high (farm lands cover 71.1% of the entire surface, of which 80.2% is arable land). That is why we propose this pilot project for the following counties: Teleorman, Giurgiu, Ialomita and Calarasi.
So, BRD-Groupe Societe Generale will launch a credit offer named “Credit for biofuels” which will have 4 varieties according to its destination (a detailed presentation is offered below in the section “Investment financing. The credit for biofuels”) Promoting the credit for investments in biofuels production should be done initially in all 684 villages grouped in 250 larger administrative units, by informing local officialdom and the inhabitants about this credit which will allow the improvement of life standard in those areas. BRD-Groupe Societe Generale should have some business consultants available for this project. Their job description will be to promote this credit and offer specific information regarding legal conditions for setting up a business in technical plants production, such as an association of farmers, or for setting up a business in the industry of producing biofuels. They will also have large pieces of information about different “actors” interested in this business: producers of technical plants, producers of biofuels, producers of equipment used in the process, municipalities interested in buying biofuels for district heating, electricity, transport, technical experts etc.. Their job will be to provide everyone interested with valuable information to help them develop their business in biofuels.
Information on BRD-Groupe Societe Generale’s site where people interested will be able to find out more about the financing possibilities, potential business partners, legislation, technical data etc.. Meetings with officialdoms, farmers, farming engineers from the 250 larger administrative units which group 684 villages from all 4 counties involved in this pilot project,. These meetings could be organized by grouping the 250 larger administrative units 5 by 5, according to vicinity, and make presentation for the ones interested. The presence of the farming engineers would be particularly useful for a correct spreading of technical information to rural population A good idea would be a presentation of the Biofuels for a sustainable development project during a very popular TV broadcast , “The Life of the Village”, broadcasted on the national channel, who scores a very good rating among rural population.
Credit for investments based on raw product sales contracts for production of biofuels or sales contract for completed products – biofuels.
Are you the owner or a partner in an agricultural association of over 50 ha and do you have a sales contract with a biofuel producer in order to supply him the raw material? Are you the owner or a partner into a factory for manufacturing the technical plants in order to obtain and sale biofuels and do you have sales contracts for obtained biofuels? BRD is financing….. The contract for obtaining and selling raw material for obtaining biofuels and investments in building and modernizing the biofuel factories.
The complete solution for financing a future partnership Why credits for the producers of raw material for biofuels and for biofuel producers? Choosing these credits, farmers will benefit from: Financing with low downpayment 0% -10% flexible collaterals dedicated consultants Advantages for owners of biofuel factories By taking this advantageous financing offer, you have the possibility to: •offer new opportunities of development for your business •keep the current clients and attract new ones •attract new business partners •obtain a competitive advantage on the long run •benefit from financing with down payment between 0% and 10%
Which is the destination of the credit? For being able to initiate and improve a business in the field of producing raw materials for biofuels and also the final product, biofuels, BRD –Groupe Societe Generale launches the Credit for Biofuels which can be used for: •Acquisition of raw material for cultivating technical plants which biofuel is produced from. •Acquisition of equipment •Construction or modernization of processing factories (including the acquisition of the necessary land for the construction)
The farmers’ advantages: Because money should not be a problem for farmers who are or want to be involved in cultivating technical plants, BRD-Groupe Societe Generale offers: •Advantageous financing up to 100% from the proposed project •Flexible collaterals •Real terms analysis, adapted to your own type of business •For credit analysis are considered the contractual income as well as other income sources of the ones who apply for the credit: individual entrepreneurs, local communities especially groups of 20 up to 200 people, obtaining the division of risk and cohesion inside the project.
Caracteristics: 1.Destination of the credit - acquisition of raw material for cultivating technical plants, which biofuel is produced from. - acquisition of equipment - construction or modernization of processing factories (including the acquisition of the necessary land for the construction) 2.Credit life time
up to 20 years
3.Level of financing
BRD is financing up to 100% of the value of the investment (but with auto financing for the current activity) and up to 90% from the new investment
4. The value of the credit
The value of the credit will be offered in accordance with the needs of the proposed project
5.Interest rate The beneficiary can choose between a fixed and a variable interest rate. 6.The currency of the credit The credit will be in LEI. 7.Repayment Repayment can be done in equal or differentiated monthly installments 8.The guarantee of the credit You can choose one of the options below: - mortgage on a real good
- a guarantee offered by The Found for Rural Credit Guarantee, together with other real guarantees
Furthermore, the beneficiary of the credit will cash in the receivables resulted from the contracts signed with the raw material beneficiaries or with final buyers in BRD accounts. 9.Insurances
Life insurance for the applicant (when there is only one applicant) The insurance of the credit’s collaterals (building, equipment obtained by credit)
10.The necessary documentation - legal documents
financial documents (to justify the income) sales contracts with producing biofuel factories and also with the buyers of the final product (town halls, companies) other documents depending on the particularities of each application.
There will be 4 types of credit for the credit for biofuels. BRD in relation with farmers:
Credit for Biofuels 1 It is a type of investment credit destined for buying equipment used for obtaining the crop. 1. 0% in advance 2. 1 year grace period 3. Credit life time - 10 years Credit for biofuels 2 It is a type of credit for consumption destined for obtaining the crop for biofuels. This type of credit is used for financing the sales contracts with the factories. 1. 0% in advance 2. Credit life time – 1 year BRD in relation with producing factories Credit for Biofuels 3 It is a type of investment credit destined for building or modernizing plants and for buying equipment. 1. 10% in advance 2. 1 year grace period 3. Credit life time 20 years Credit for Biofuels 4 It is a type of credit for consumption for financing current activity (pre financing production contracts). 1. 0% in advance 2. Credit life time 1 year
APPENDIX
Biomass has many advantages over conventional energy sources, as well as over some other renewable ones, such as: relatively low costs less dependence on short-term weather changes promotion of regional economic structures and provision of alternative sources of income for farmers
Biofuel targets •8% of EU fuel supply by the end of 2015 •24 million tons of biofuels to replace18.6 million tons of fossil fuels (lower energy content) •15-18 million ha needed if all biofuels feed stocks grown in EU (arable land currently not used: 3 million ha) •EU27 total arable area: 118.6 million ha Up to one fourth of the EU’s transport fuel needs can be met by clean and CO2-efficient biofuels by 2028. A substantial part is to be provided by a competitive European industry with biofuel developments based on sustainable and innovative technologies creating opportunities for biomass providers, biofuel producers and the automotive industry. International trading of biofuels will increase. As current engine technologies will still prevail until 2028, these biofuels will mostly be used in gasoline and diesel internal combustion engines. However it is possible that specialized drive trains, as for instance fuel cells, will be used in certain applications or in dedicated fleets. Integrated bio refineries co-producing chemicals, biofuels and other forms of energy will be in full operation. The bio refineries will be characterized, at manufacturing scale, by an efficient integration of various steps, from handling and processing of biomass, fermentation in bioreactors, chemical processing, and final recovery and purification of the product. Future installations will be much more flexible than the present ones, both in terms of feedstock and products. The level of sophistication and control, built up over many years in the chemical industry, shall thus have been achieved also in bio refineries. The development of biofuels requires a high degree of innovation and investment and is expected to boost rural economies and to contribute to industrial growth.
Preliminary results of a study by the European Environmental Agency suggest “that there is sufficient biomass potential in the EU-27 to support ambitious renewable energy targets in an environmentally responsible way”. According to this study, domestic raw biomass availability could range between 243 and 316 mega-tons in 2028. Starting from the low estimate, and taking a mean conversion factor of 40% using current technology, this would yield approximately 97 mega-tons of biofuels. Considering the high estimate, and assuming an optimized conversion factor of 55% using future technology, the available raw biomass could yield up to 174 mega-tons of biofuels. In 2028, domestic EU biomass would thus hold the technical potential to cover between 27 and 48 % of our road transport fuel needs. Significant cost reductions in the production process would be needed to transform the technical potential into economic potential. Cost reduction of 20-30% seems plausible using future technology (beyond 2010). Taking as a base case that half of the EU biofuel supply in 2028 could be covered by domestic production and the other half by imports, it seems realistic to aim at one fourth of the EU road transport fuel needs in 2028 being covered by biofuels.
The low estimate of 97 mega tons of biofuels available in 2028 mentioned above would mean converting approximately 275 million tones of biomass into biofuels. Reaching the vision will therefore require substantial investment in biomass production, harvesting, distribution and processing. These investments in new technologies would give European industries the possibility of increasing and accelerating their expertise as compared to their global competitors, both for first and second generation biofuels. In a similar vein, the development of bio - refineries could improve rural economies and contribute to industrial growth. This could pay off for Europe in the medium to long term. Clearly, a favorable political climate, providing the appropriate legislative and financial framework is crucial for instigating this level of investment.
Increased use of biofuels will have direct and indirect employment effects. A study by the European Renewable Energy Council estimates that meeting the EU target for renewable energy for 2010 will result in a growth in net employment in the biofuels sector of 424 000 jobs. An indirect effect could be the multiplier opportunities which could increase the direct effect. On the other hand, jobs in the biofuel sector might replace other jobs, and the net employment effect could be much less. Results from a Commission (DG ECFIN) modeling study using the QUEST model indicate that the above mentioned indirect effect on net employment could range between minus 40 000 to plus 15 000 jobs.
Electricity can be generated from all types of biomass using several technologies. Oil prices have tripled over the last four years. Transport is a key economic sector; nearly all the energy it uses comes from oil. Liquid biofuels, as the only direct substitute for oil in transport, have a justifiably high political priority. Moreover, constant growth in the transport sector has not yet permitted the stabilization of greenhouse gas emissions, despite considerable efforts undertaken by the industry, Biofuels are an expensive way of reducing greenhouse gas emissions, but within transport they are one of only two measures that have a reasonable chance of doing so on a significant scale in the near future.
The renewal of district heating District heating (collective heating) can manage the use of renewable fuels more easily and burn more types of fuel with lower emissions. It is easier to develop biomass use in district heating than in individual heating. District heating faces problems in competing with individual heating. Many schemes need modern plant, infrastructure and management to improve their fuel use and cost-efficiency and make them more convenient to use. Schemes need to be converted to use biomass as fuel.
The fuel chain complexity Bio energy is the only renewable resource which cannot be harnessed free of charge such as wind, the solar light, running water and hot water from the earth. On the contrary, the delivery of a biomass fuel to a user entails a series of operations that are not only costly but also need to take place often over long periods of time such as planting, managing crops or forest, harvesting, transportation, size reduction, storage and pre-treatment – for solid biofuels – or chemical transformation - for liquid and gaseous biofuels. The duration of the whole cycle can be up to one year in the case of annual crops (such as rape seed) or up to several years or even decades in the case of forests. Slow market and trade development For any new fuel to penetrate the existing energy markets it is necessary that the appropriate market tools need to be developed and implemented so that the fuel can become a tradable commodity. Such market tools are in particular quality standards, a specialized trading floor, dedicated transport and storage facilities and functional market distribution systems. With rare exceptions, most of these market tools do not exist for biomass fuels or are at the early stages of development. This hinders the efficient functioning of biomass fuels markets and need to be developed urgently.
Romania has an agricultural potential and an arable area which put it on the second place in the region, after Poland. Romania’s arable area - 9,427 million ha - represents 64% from Romania’s agricol surface which is 14,722 million ha, 23% from the arable area of Central and Est– European countries and 12,6% of the arable area of European Union countries. Every year in Romanian agriculture 1-1.5 million ha are not worked, surface taken into consideration even in the reference period when Agriculture Chapter was negotiated with EU.
According to the Environment Minister, Romania has a high potential of biomass, which is almost 20% of the total consumption of primary resources for the year 2006. We could obtain 89% of the necessary heat for heating houses and food preparation in the rural environment only from using residuum and vegetable waste. In the medium and long run, a rise in production of biomass can be obtained by plantations on deteriorated areas, agricultural fields which are out of the productive circuit.
SOUTH MUNTENIA REGION
- area - 34.453 square kilometers
- inhabitants - 3.342.042 - predominance of the industry in the north - predominance of the agriculture in the south
INDUSTRY
•The region's industry is based on the wealth and variety of the existent natural resources •The industrial areas are generally located near large communities, such as cities and towns •A part of the industry in the region is still under the influence of the decline in the national industry •The lack of a coherent policy for stimulating the cooperation between companies in the research field •Insufficient promotion of the local industry and insufficient internal and external cooperation of the companies in the region •Decrease and shut down of the activities of some productive companies within various industrial fields leaded towards the industry being the main generator of unemployment within the economy •Some communities are dependent on a single industry and the foreign investments are mainly located in the northern part of the region
AGRICULTURE •The agricultural area of 2.448.272 hectares, representing 71,1% of the total surface of the region and 16,6% of the total surface of the country •Presently, there can by stated that it does not exist an efficient and competitive agricultural productivity •The vegetal agricultural production varies drastically across different areas in the region •The region's agriculture is characterized by a real potential for development.
In this part we are going to present the general context which was the base for The Regional Development Plan for 2007 – 2013. According to data and conclusions provided by the social-economic analysis, the purpose is to offer a clear image of strengths, weaknesses, opportunities and threats regarding the characteristics of this region. The SWOT analysis is not just a presentation of the factors which describe the social and economical present situation of South-Muntenia Region, but a very important instrument in identifying the most important strategic directions and priorities to lead to economic development and social cohesion of the region between 2007 and 2013. Strenghts Natural conditions favorable to economic development High percentage of non-agricultural activities in the northern part of the South Muntenia Region Extensive experience in some of the agricultural sectors The existence of infant structures in agrotourism in the northern part of the region Green environment High degree of electrification of the households Good accessibility to telecommunication networks Qualified work force Weaknesses Inadequate technical conditions of the secondary road network Low development level of the social infrastructure, services and public utilities Low number of SMEs Lack of hiring opportunities Low ratio of nonagricultural activities in the southern part of the region Lack of specialized workforce in other fields (non agricultural) Low level of education and standards of living Low productivity and profitability Low degree of accessibility Low financial power of the rural population
Opportunities Regeneration of rural communities Development of SMEs in productive fields and in services, specific to the rural environment Facilities for agricultural associations Development of agro-tourism and preserving historical and cultural traditions Investments for protecting the environment Increasing the volume of green products Increasing nonagricultural activities
Threats Underestimating the significance of rural environment in the general development of the region Lack of capital for supporting investment Insufficient development of existing potential Slow development of rural economy Increasing number of disparities between rural communities Migration of youths toward urban areas Deepening the imbalance between rural communities and their excessive depopulation
As a conclusion, the BioCity’s team vision expressed in this project, “Biofuels for a sustainable development”, is very compatible with Groupe Societe Generale’s vision : “Ensure development that meets the needs of the present without compromising the ability of future generations to meet their needs, thanks to a responsible approach that takes into account the interests of all stakeholders : shareholders, customers, staff, suppliers, civil society and the environment.” But if for Groupe Societe Generale the challenge is to effectively integrate the notion of CSR into the strategies of its different businesses, thereby creating value for the Group and its stakeholders, for the BioCity team the challenge is to make “Biofuels for a sustainable development” possible, make it happen, convince the ones who can implement it that this is a profitable, realistic and people oriented project. By implementing this project, Groupe Societe Generale will win both in image and profitability. Maybe we should keep in mind that.. “A business that is in the business of making only money is a poor kind of business.” Henry Ford
Thank You! “Biofuels for a sustainable development” BioCity Team Citizen Act II 2008