The team that manages Norwich Union’s sustainable futures funds believes high petrol prices, energy security fears and political initiatives to reduce carbon dioxide emissions will increase demand for biofuels.
The team that manages Norwich Union’s sustainable futures funds believes high petrol prices, energy security fears and political initiatives to reduce carbon dioxide emissions will increase demand for biofuels.
Dr Peter Michaelis, manager of the Norwich UK Ethical fund, said: “Governments in the US, Europe, Canada, Australia, India and Thailand are encouraging the use of biofuels. President Bush has proposed a large increase in clean energy research spending, which included US$150m to develop bio-based transport fuels, and the EU 2003 Biofuels Directive wants to more than double the use of biofuels in petrol and diesel by 2010.
“High oil prices make ethanol a profitable product compared to current oil prices. Break even prices for ethanol are around US$20 a barrel of crude. Today’s oil prices are more than three times this level and that means ethanol production can be profitable.
“There are risks to investing in this sector. The smaller pure-play biofuels companies have yet to be profitable and are exposed to uncertainty over government policy. We believe the best way to invest in this growth area is to focus on companies that have biofuels products but which are large enough to be able to diversify into other product areas.”
Norwich Union’s Sustainable Futures funds are managed by Morley Fund Management.
-ends-
Press office contacts:
David Gwyer 01904 452828 Out of hours 07800 699508
Cheryl Cox 01904 452617 Out of hours 07800 695275
Notes to editors:
About biofuels
Biofuels are fuels made from animal or vegetable matter and produce less carbon dioxide than petrol or diesel. There are two types:
- Biodiesel
- Produced from vegetable oils (oilseed rape/soybean) and/or animal fats. It contains no petroleum, but can be blended with petroleum diesel to create a biodiesel blend
- It can be used in compression-ignition (diesel) engines with little or no modifications, and is biodegradable, non toxic, and essentially free of sulphur.
- Bioethanol
- Produced from fermenting starch or sugar (corn, sugar beet/cane)
- Hydrous ethanol (95% by volume) contains some water – it can be used directly as a gasoline substitute in cars with modified engines
- Anhydrous (or dehydrated) ethanol is free of water and at least 99% pure. This ethanol can be blended with conventional fuel 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-called flexible fuel vehicles.
About Norwich Union’s socially responsible investment funds
Norwich Union has seven socially responsible investment funds. The investment management team is based at Morley Fund Management and is one of the largest and most experienced in the UK. The team is lead by Dr Peter Michaelis.
About Norwich Union
Norwich Union is one of the UK's biggest insurers. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union has strategic alliances with building societies and other leading UK brand names including CIS and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media.
About Morley Fund Management
Morley Fund Management Limited is the UK-based asset management business of Aviva plc. Firms within the Morley group of companies manage £156bn from offices around the world as at 28 February 2006.
Morley manages both institutional and retail funds under the Morley brand. It also acts as investment manager for a range of retail investment 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 at www.morleyfm.com