Can biofuels cure our oil dependency?

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It is becoming clear that biofuels made from sugar and vegetable oils will fail to substantially reduce our dependance on oil. Do second-generation biofuels stand a better chance?

So far, the EU has mainly focused on using more first-generation biofuels, such as biodiesel and bioethanol. However, an increasing number of doubts are being raised about this strategy: 

  • Can first-generation biofuels really contribute to reducing GHG? In principle, biofuels are "carbon neutral", but certain studies show that biofuels can actually produce more GHG than conventional fuels if one includes the emissions from agriculture, transport and processing involved in their production. 
  • Can first-generation biofuels compete with traditional fossil fuels? EU-produced biodiesel just breaks even at oil prices around €60 per barrel, while bioethanol only becomes competitive with oil prices of about €90 per barrel. 
  • Are first-generation biofuels driving up the price of food? Biodiesel production has significantly increased the consumption of rapeseed within the EU, driving the price of edible oils to record levels. Increased biofuel consumption is also likely to cause significant growth in the production and consumption of ethanol, pushing up the price of sugar. 
  • Are first-generation biofuels greener than traditional fossil fuels?  In order to reach its 5.75% biofuels target, Europe will have to rely on imports of ethanol from Brazil, where the Amazon is being burned to plant more sugar and soybeans and Inodnesia where rainforest land is being cleared out to house palm oil plantations. Some environmental groups are already terming first-generation biofuels “deforestation diesel” – the opposite of the environmentally friendly fuel it is supposed to be. 

An increasing number of voices are therefore calling on the EU to focus its attention on “second-generation” biofuels. 

The results of a public consultation carried out by the Commission between April and July 2006 in view of reviewing its biofuels strategy before the end of 2006 shows that the majority of stakeholders believe second-generation biofuels to be promising because: 

  • They have a more favourable GHG balance compared to most current biofuels; 
  • they can be produced at cost-competitive prices, especially if low-cost biomass is used; 
  • they are able to use a wider range of biomass feedstocks; - they do not compete with food production, and; 
  • they offer a better fuel quality than first-generation biofuels. 

The main pathway for second-generation bioenergy production in the EU is gasification - also called the biomass-to-liquid (BTL) pathway. It uses high temperatures, controlled levels of oxygen, and chemical catalysts to convert biomass into liquid fuels, including synthetic diesel and di-methyl ether (DME). 

Gasification generally requires large-sized facilities and big capital investments, which makes progress in this area slower than in others. Nevertheless, the BTL pathway can process lignin, which comprises about one-third of plant solid matter, and can thus achieve higher liquid yields, displacing more petroleum. 

Current EU President Finland announced in October 2006 that it intended to lead the way in terms of second-generation biofuels, notably by providing funding for new gasification equipment for VTT, the Technical Research Centre of Finland. The new equipment will allow synthesis gas to be refined from biomass for the production of diesel fuels. The gasification plant will be able to exploit any carbonous raw-materials, e.g. forest industry residues, bark, biomass from fields, refuce-derived fuels and peat. 

In its review of the biofuels directive, the Commission will be looking to enhance support to member states for developing such second-generation technologies. It will also look into setting new targets for biofuels use and could even decide to make them mandatory. It is also likely to impose minimum environmental standards for biofuels production. 

Positions: 

Speaking at a European Conference on Biorefinery Research on 20 October 2006, Finland’s Minister of Trade and Industry Mauri Pekkarinen said: ”First-generation biofuels, largely based on biomass crops, can be used to take the first major step towards bioenergy-based transport.” Nevertheless, making big strides in the adoption of bioenergy in transport will require the development of second-generation biofuels and the shift of the main source of raw materials for energy from arable land to forests and peat bogs, he believes. 

Energy Commissioner Andris Piebalgs said: “Second-generation biofuels can considerably widen the feedstock options and provide for a far larger potential of market share than the 5.75% currently envisaged for 2010 in the Biofuels Directive.” 

Environment Commissioner Stavros Dimas added: "Second generation biofuels seem to have much lower overall greenhouse gas emissions and other environmental impacts than the first generation biofuels that dominate production in the EU today…They also offer higher potential for production and cost reductions, as they can be based on biowaste with fewer competing end-uses". Although most governments believe that exploiting first-generation biofuels is a necessary step while awaiting further progress in second-generation biofuels, the Danish government is of the opinion that promotion of biofuels at the Community level should be concentrated around the development and marketing of the more cost-efficient second-generation biofuels. 

Danish Environment Minister Connie Hedegaard has even criticised what she terms “the hype over biofuels”, saying: “People think that just because something gets a ‘bio’ label then it must be green.” 

Volkswagen Chairman Dr. Bernd Pischetsrieder is calling on politicians to develop a tax model that gives second-generation biofuels preference, saying: “The present assessment regarding the sustainability of first and second-generation biofuels is entirely unsatisfactory, both in economic and environmental terms. One biofuel is not the same as another: some first-generation biofuels can best be described as a ‘wolf in sheep’s clothing’. Some of them have a worse CO2 balance than conventional gasoline fuels, but nevertheless still bear the name of ‘biofuel’. First-generation biofuels receive tax incentives from scarce budget resources and consequently constitute a bad investment. That cannot be considered sustainable in either the ecological or the economic sense of the word.” 

Envrironmental groups also mention the importance of the second generation of biofuels. WWF points out that “demand for agricultural and other commodity feedstocks for first-generation bioenergy production is already dramatically changing production and trade patterns”, driving environmental changes and driving up food prices. It believes that investing in second-generation biofuels will lead to greater GHG reductions, larger potential cost benefits and more sustainable land use. 

Jeremy Tomkinson, chief executive of the UK National Non-Food Crop Centre (NNFCC), shares these concerns: “If you are chopping down huge areas of rainforest in order to grow palm oil, not only is the palm oil not very environmentally friendly, think of the damage to the area's biodiversity.” He believes second-generation fuels are the answer but notes that two barriers must to be tackled before second generation biofuels arrive at the pumps - technology and cost. "For a world-scale BTL (Biomass-To-Liquid) plant, you are looking in the region of £200m. Currently, a 250,000-tonne biodiesel plant costs about £50m, so that is a big difference for the same amount of fuel.” But he believes “BTL really could be the way forward”, thanks to its environmental advantages. 

However, European farmers represented by COPA-COGECA, who are benefiting from increased employment thanks to the cultivation of biofuel crops, are lobbying for bigger incentives to produce bioethanol fuels and to increase quotas of biodiesel in diesel. 

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