The sugar demolition derby
The plant has traditionally been maintained to a high standard, with significant capital investment (€25m last year alone) made in recent times. But it now has a price on its head; even if it is only partially dismantled, and converted for ethanol, Greencore and growers stand to lose €36.4m.
On the one hand the EU is paying out hundreds of millions for sugar quota to be given up and factories dismantled in Ireland (the only country which will no longer produce any sugar), Italy, Denmark, Sweden, Finland, and Lithuania.
On the other hand the EU wants all member states to replace 2% of petrol and diesel transportation fuels by 2005, and 5.75% by 2010, with biofuel. The contradiction is that sugar factories are ideal for conversion to production of ethanol, an ideal biofuel. Germany is already producing 20% of its ethanol from sugar beet, France 33%, and Poland 33%.
Ethanol is a clean burning fuel, with only one third of the “greenhouse gas” emissions of fossil fuels — which is why its production has increased 11% world wide over the last five years.
Sugar beet yields more ethanol per hectare than any other crop sown in Europe, through a simple production process, because the sugar in the beet is readily available for fermentation.
Experts commissioned by Cork County Council said Mallow could be ready for ethanol production from sugar beet after €45 to €50m of conversion expenditure. Put aside arguments over its disadvantages (distance from ports and high cost compared to a green field site), and consider how short-sighted the European Commission, the Council of Agriculture Ministers, and the European Parliament were: paying for modern factories to be flattened, rather than held in reserve until the next hike in transport fuels forces Europe to become more self-sufficient.
They must have known that most of Europe’s existing ethanol plants have been built as extensions to sugar plants.
The conversion of the Mallow sugar factory into an ethanol production facility would enable Ireland to meet 75% of its ethanol production obligations under the EU biofuels directive; but the dilemma is that the EU is effectively offering us €145m to dismantle the factory.
Already, work has started on demolition of the Carlow sugar factory, and clearance of its 300 acre site. The Carlow factory was closed by Greencore before the sugar reform, so does not qualify for restructuring aid, when it is dismantled. However, Greencore will be able to sell premises formerly used by Irish Sugar at Carlow, Mallow, Wexford and Thurles for at least €187m — a course of action they would be foolish to let slip, and which they are now embarking on by clearing the Carlow site with a view to having it re-zoned.
Instead, the people left looking foolish are the Eurocrats who designed a restructuring fund to squeeze out less competitive sugar producers, and provide money to cope with social and environmental impacts of factory closure and develop new businesses — but only if sugar plants, worth hundreds of millions and strategically important for the EU’s biofuel initiative, are demolished. At least one member state has ignored the Eurocrats and Ministers and gone the sensible route. Slovenia’s only sugar plant will be converted into a bio-ethanol plant after 2007.
