The market
Global production of gum resin extracted from pines is around 1.5 million tonnes. The resin is transformed into colophane and ingredient for the paper, painting, ink, adhesives and turpentine industry, a highly flammable biochemical product. The global production of renewable turpentine reaches 370,000 tonnes. Its use was limited to local mixtures for varnish and paintings. The global market for these natural products - which are largely replaced by synthetic products derived from crude oil - is assessed at less than a billion euros.
Innovation
When Mr. Soichiro Honda introduced his motorcycle in 1947, she was propelled to the essence of turpentine. At the time, gasoline was difficult to obtain and as 70 % of Japan was covered with forests, mainly pines, Mr. Honda organized the levy, distillation and distribution of turpentine parallel to the sale of bicycles. It was unique to provide both the transport vehicle and the fuel. However, this engine required a lot of pedaling to warm up and once the combustion started, a cloud of smoke quickly emerged, creating a "fireplace" as a nickname of the motorcycle.
Paolo Lugari and his team from Las Gaviotas were the pioneers ten years ago with the introduction of biodiesel from palm oil. Las Gaviotas operated in 2004 the first Biodiesel factory in Bogotá, Colombia, but realized that the contribution of methanol and the excessive quantity of glycerin as by-product required commercial limitations. The team therefore turned their creative spirit towards turpentine, a by-product of the transformation of the resin. Las Gaviotas, located in Vichada, imported fuels for tractors and motorcycles at great cost. The experts estimated that the purification of the turpentine essence in a clean fuel was too expensive. However, Paolo Lugari and his colleagues took up the challenge and set up a four -step cascade which eliminates all the impurities of more than 10 microns. If Mr. Honda had had access to so pure turpentine, he would have proposed a massive reforestation under the tropics in parallel with the conquest of the world bicycle market.
Innovation goes beyond the purification of turpentine essence by gravity and time. The novelty lies in the design of a corporate model which generates four income flows from a newly regenerated forest, transforming a savannah into the forest as it was before the arrival of cattle breeders who slaughtered the trees , cut and burned the region and planted non -native herbs.
The first cash flow
Las Gaviotas has established itself in the world of sustainable and competitive companies with the introduction of solar water heaters. With 40,000 solar water heaters installed with a 25-year warranty, the research center has proven that it can compete in terms of price and performance. The regeneration of the forest costs approximately $ 1,100 per hectare. An emerging forest will increase the pH of the soil, which filters rainwater. The sale of drinking water becomes a first cash flow which is also part of a health prevention strategy within a region where a large majority of the population suffers from gastrointestinal diseases due to lack of water.
While Las Gaviotas is able to meet all local demand, the excess filtered water is sold in Bogotá. After seven to eight years, the young forest begins to produce gum resin. As Las Gaviotas produces its own renewable energies on site and transforms resin locally, jobs are created and cash flows are generated. The search for additional cash flows, in particular the reduction in fuel imports, led to a third and a fourth income: turpentine and carbon credits.
The opportunity
If Las Gaviotas was moving towards its full capacity by exploiting its existing 8,000 hectares with around 3.6 million pines, it could produce 2.3 million liters of turpentine as renewable biofuel each year. No external input is necessary. If we consider that the cost of landing of fuel in the region is 3 euros per liter, the transformation of turpentine into a pure renewable fuel from the forest adds money to net profit. The money that would have left the local economy now circulates in the region and generates jobs and income.
Anyone, located near an existing pine forest, could exploit the trees resin. Instead of treating resin only for colophane, a bioraffinery should be built which would produce the four cash flows. It's profitable. When JP Morgan studied the financial data of the regenerated forest existing in Colombia, planted by the employees of Las Gaviotas, the business bankers specializing in emerging markets concluded that the regeneration of a tropical forest in a savannah - which was once a forest - generates a cumulative and updated net cash flow in 11 years. This means that the amount invested in the first year is completely recovered in just over a decade. It is not surprising that the president of JP Morgan took the time to visit the President of Colombia to support this investment opportunity.
While different pines produce different turpentine contents, it is estimated that essences stressed like those of the tropics planted on poor soils, such as the L'Orenoque basin, and those located at high altitude like Bhutan in Himalayas produce at least Half a liter of turpentine as pure fuel per year. Mature trees could even produce one liter per year. Two thousand five hundred trees could produce enough fuel to travel 50,000 kilometers with an eco-energy car which consumes on average five liters per hundred kilometers. This is an attractive option for distant savings, since the proposal does not simply aim to compete with the price and yield of diesel or gasoline; This approach changes the business model when an investment generates constant return and increases the value of the land. Wood can still be transformed into pencils for exclusive companies like Faber-Castell, thus creating a fifth cash flow.
Lands that do not generate income and have no drinking water are worth nothing. A forest that only houses biodiversity may be destroyed. It is necessary to create more added value, a prior condition for the creation of sustainable jobs. A newly planted forest that provides income, meets immediate needs such as water and fuel, is precious. This business model developed by Las Gaviotas builds a share capital for the local population which surpasses the capital gains generated by the holding of Microsoft shares over 25 years. Who is ready to do the same?
