Article date: 8 May 2006
The team that manages Norwich Union’ssustainable futures funds believes high petrol prices, energysecurity fears and political initiatives to reduce carbon dioxideemissions will increase demand for biofuels.
Dr Peter Michaelis, manager of the Norwich UK Ethical fund, said:“Governments in the US, Europe, Canada, Australia, India andThailand are encouraging the use of biofuels. President Bush hasproposed a large increase in clean energy research spending, whichincluded US$150m to develop bio-based transport fuels, and the EU2003 Biofuels Directive wants to more than double the use ofbiofuels in petrol and diesel by 2010.
“High oil prices make ethanol a profitable product comparedto current oil prices. Break even prices for ethanol are aroundUS$20 a barrel of crude. Today’s oil prices are more thanthree times this level and that means ethanol production can beprofitable.
“There are risks to investing in this sector. The smallerpure-play biofuels companies have yet to be profitable and areexposed to uncertainty over government policy. We believe the bestway to invest in this growth area is to focus on companies thathave biofuels products but which are large enough to be able todiversify into other product areas.”
Norwich Union’s Sustainable Futures funds are managed byMorley Fund Management.
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Notes to editors:
Biofuels are fuels made from animal orvegetable matter and produce less carbon dioxide than petrol ordiesel. There are two types:
- Produced from vegetable oils (oilseed rape/soybean) and/oranimal fats. It contains no petroleum, but can be blended withpetroleum diesel to create a biodiesel blend
- It can be used in compression-ignition (diesel) engines withlittle or no modifications, and is biodegradable, non toxic, andessentially free of sulphur.
- Produced from fermenting starch or sugar (corn, sugarbeet/cane)
- Hydrous ethanol (95% by volume) contains some water –it can be used directly as a gasoline substitute in cars withmodified engines
- Anhydrous (or dehydrated) ethanol is free of water and atleast 99% pure. This ethanol can be blended with conventionalfuel in proportions of between 5% and 85% (E85). As a 5%additive it can be used in modern engines without modification.Higher blends require modified engines as run on so-calledflexible fuel vehicles.
About Norwich Union’s sociallyresponsible investment funds
Norwich Union has sevensocially responsible investment funds. The investment managementteam is based at Morley Fund Management and is one of the largestand most experienced in the UK. The team is lead by Dr PeterMichaelis.
About Norwich Union
Norwich Union is oneof the UK's biggest insurers. It is a leading provider of life,pensions and investment products and one of the largest FinancialAdviser (FA) providers. FAs provide over 70% of the company'slong-term savings business in the UK.
Norwich Union has strategic alliances with building societies andother leading UK brand names including CIS and The Royal Bank ofScotland Group. Norwich Union’s news releases and a selectionof images are available from Aviva's internet press centre atwww.aviva.com/media.
About Morley Fund Management
Morley Fund ManagementLimited is the UK-based asset management business of Aviva plc.Firms within the Morley group of companies manage £156bn fromoffices around the world as at 28 February 2006.
Morley manages both institutional and retail funds under the Morleybrand. It also acts as investment manager for a range of retailinvestment funds, marketed in the UK under the Norwich Union brand,and international funds marketed under the Aviva Funds brand.
Further information about Morley Fund Management can be found atwww.morleyfm.com