In March 2013, the World Biofuels Markets conference took place in Rotterdam, the Netherlands. It gathered many biofuels industry stakeholders: representatives of companies involved in biofuel production (first and second generation), biofuel and fuel production technology providers, industry associations, some vehicle manufacturers, governmental institutions and NGOs. The Global Biofuels Center (GBC) attended the event where our Manager for Europe & Africa, Adrian O'Connell, gave a presentation on the Future Roadmap for Biodiesel which can be viewed here. Below is a short summary of some of the main topics addressed at the conference.
Climate Change and Biofuels
Some keynote speakers addressed the fundamental questions of climate change, sustainable development and the role of biofuels in the changing economy. Maria van den Hoeven, executive director of IEA, presented a forecast for global energy-related CO2 levels, saying that they are most likely going to rise to twice today’s level by 2050, with transport’s CO2 emissions also growing. IEA expects cellulosic ethanol to be a major contributor to biofuels supply from 2020 onward and that first-generation biofuels will play a significant role in the transition toward advanced biofuels. Having said that, van den Hoeven stressed that sustainability should be regulated on a global scale; otherwise, regional requirements will create barriers in global trades.
One of the most passionate speeches was given by environmentalist and writer Sir Jonathon Porritt, who opened it with the statement “Don’t deny climate change.” He said that oil companies delay action on climate change mitigation because this action on a global scene would have to leave 80% of fossil reserves untapped. According to him, in 2012 indirect subsidies to the sector accounted for $523 billion. Porritt said that biofuels are the necessary transitional step toward a low-carbon economy, and their sustainability “cannot be discussed for ages.” He is of the opinion that there must be mandatory sustainability requirements; in particular, proper GHG savings must be ensured. In a long-term perspective, the price of carbon is essential for a low-carbon economy.
Selected Biofuels Developments
Kevin McGeeney from Star Supply commodity brokers said that, considering the current ILUC proposal (see below for further details on ILUC), he expects to see the end of first-generation biofuels between 2017 to 2020, principally because of the potential of new feedstocks such as sweet sorghum and the implementation of quadruple-counting rules. Hart Energy does not share this opinion.
Sari Mannonen of UPM gave a presentation on the company's emerging project to produce 100,000 metric tons (MT) annually of renewable diesel by 2014 under the name bioVerno, which, according to the company’s estimates, is around 25% of the Finnish renewable energy target of 20% by 2020. The company will use pulp, black liquor and tall oil as feedstocks and the final product is expected to deliver a record 80% lower GHG emissions than conventional diesel. It can be used in blends from 5 vol% to 30 vol% without any problems. The company is also taking part in a BtL project in Strasbourg, France, using Axens’ technology.
Jan Koninckx, global business director for biorefineries at DuPont, spoke about the current main areas where businesses were seeing challenges, which centered around technology, feedstocks, policy and capital. Public policy in particular was noted as adding a high level of risk to business planners. Koninckx indicated that the prices of the finished product for next-generation ethanol could range from as high as US$7/gal (nearly three times the price of corn ethanol) down to a possible future low of $1.5/gal (or $0.40 per liter) – a level at which he noted subsidies would not be needed any more. Hart Energy notes the lower figure was calculated on the basis of a $50 per MT cost for dry feedstock (among other factors). DuPont cautioned that, in the event of feedstock demand for electricity production, this could see the feedstock price rise to $70 to $80 per MT and thus increase the price of the final product. Koninckx noted that DuPont's second-generation plants could be co-located at existing ethanol plants.
Kevin Willerton of Westinghouse Plasma Corp. (WPC) made a presentation on the company's plasma process, which produces syngas and a solid aggregate. WPC has one such project under construction in Tees Valley in the U.K. Willerton noted that a company will currently be paid €80 per MT to dispose of waste when using it as a feedstock. Furthermore, he noted that waste currently requires landfilling; therefore, WPC's system creates an almost "reverse ILUC" effect by reducing the required land area to be used as a waste dump. Importantly, at a gate fee of €80 per MT, WPC considers its system able to produce fuels at zero overall cost. Depending on the feedstock, the fuel could qualify as a quadruple-counting biofuel according to the European Commission’s ILUC proposals. WPC indicated its new project will use 500,000 MT/year of municipal solid waste (msw); considering the city of London alone produces around 18 million MT of msw each year, WPC does not foresee any difficulty sourcing the required feedstock.
Regarding the current likely availability of used cooking oil (UCO) feedstocks in some areas in Europe, Hart Energy noted a presentation from Michael Fiedler-Panajotopoulos, a member of the Executive Board of the European Biodiesel Board and a director at German biodiesel company Petrotec. Fiedler-Panajotopoulos' presentation quoted a company called Greenea and suggested there was annually 14,000 MT of UCO available in Ireland, 96,000 MT in the U.K. and 140,000 MT in Germany. These values are much lower than some projected levels of utilization of UCO for FAME production.
Auto Manufacturers Point of View
Dorothée Lahaussois, senior specialist in Toyota's Energy Research Group, gave information on two gasoline types, RON 95 E15 Blueone sold by Argos in the Netherlands, and RON 98 E15 sold by Lukoil in Lithuania. Neither meets the European gasoline specification EN 228:2012. Lahaussois stated that there is currently no harmonized E10 labeling across the EU, but noted that the CEN recommends putting EN 228 and E10 on the pump label. GBC reported on the E15 sold in the Netherlands and Lithuania in the What's News on April 12, 2013.
Jonas Strömberg, Scania's director of sustainable solutions, described three aspects required for achieving sustainable heavy duty transport: reducing local emissions, improving energy efficiency and fighting GHG. Strömberg noted that energy efficiency is the No. 1 commercial driver as it directly reflects in the vehicle operator’s fuel bill. Well-organized logistics and "smarter transport," drivers’ education, biofuels and improved vehicle technology are the minimum ways to help achieve that goal. Scania improved fuel consumption by 11% simply through driver training initiatives. As mentioned earlier by DuPont, Strömberg cautioned that long-term product decisions demanded long-term policies, and then described some of the aspects of Scania's plan to expand the usage of ED95 (diesel with 95 vol% of ethanol for diesel engines). Scania believes it would start with ED95 being used in cities (with public transport, etc.), and expect that the use would grow beyond the cities.
Feedstock and Agriculture
Among the feedstock discussions, it is worth highlighting the one focused on jatropha. This discussion started off on the disillusionment created by the myth that jatropha is a “miracle” crop that could be grown on degraded land without any substantial treatment. According to Henk Joos, CEO of Quinvita, an industrial crop technology company that has expertise in jatropha, this crop requires proper conditions – it needs to be planted in the right time window, in specific density and with the use of specific fertilizers. Nikolaos Brouzos, head of biofuels trading at Galp, a Portuguese oil company which invested in a 960 ha jatropha plantation in Mozambique, added that the crop’s own toxics are not strong enough to protect it from insects, so the company is working on detoxification. According to Quinvita, jatropha can give 3 MT of grain per 1 hectare and this may grow to 7 MT by 2018. Despite its investments in the jatropha plantation, Galp will not produce biofuel from this crop (it intended to produce HVO) because the Mozambique government put an export tax on the crop to keep the production and consumption in the domestic market.
One session was dedicated to developments in the agricultural sector in Poland and Ukraine. Unfortunately, the speakers from Ukraine did not come to the conference, so the session turned out to focus only on the agricultural sector in Poland. Ewa Krasuska from the Polish Institute of Soil Science and Plant Cultivation opened her presentation with the statement that the projections regarding yields in Eastern Europe, provided by the IEA and used by the European Commission in their documents, including work on ILUC, are overestimated.
The agricultural sector in Poland is mainly based on small farms that employ many people. In addition to that, the quality of the soil is average or poor, with small yields. In Poland, the productivity is 3.1 MT per hectare, whereas for example in France it is 4.5 MT per hectare. Krasuska said that the productivity could be increased by 25% but the current changes are small, in particular because of intrinsic problems of the agricultural sector. Farmers are given direct payments under the Common Agricultural Policy for the sole fact of owning an agricultural land. Their crop production cannot compete on a large scale with the production in Western countries, so they have no incentives to invest and work more. According to her prognosis, the size of the land that could be used for biofuels production in Poland has been overestimated. A maximum of 3.2 million MT of rapeseed could be used for biofuel production in the short-term time frame and out of a production of 30 million MT of cereals, only 2.4 million MT could be used for ethanol production.
This year, ILUC dominated discussions. GBC has been reporting on the issue extensively (see latest Special Report, Jan. 30, 2013), therefore this report does not cover the ILUC-related talks.