Debate on costs of advanced biofuels heats up

According to sources, the transition would lead to a temporary (2030) increase of fuels costs ranging between 1% and 3.6%. [Shutterstock]

This article is part of our special report Can advanced biofuels really work?.

The debate on the technologies available to produce second-generation biofuels, and their related costs, is heating up in Brussels amid disagreement over the European Commission’s estimates.

The cost projections, put forward by the Commission in an annex to the Renewable Energy Directive, are based on a range of scenarios that differ widely in terms of speed and level of ambition, industry sources say.

According to Commission estimates, the transition would lead to a temporary increase of fuel costs ranging between 1% and 3.6%, depending on the type of fuel and the level of policy ambition on advanced biofuels. That price gap should gradually close after 2030, as production increases.

The final cost impact is likely to land in the mid-range of the assessed scenarios, or slightly above 2%, EU sources told EURACTIV.

Industry rejects “groundless” EU cost projection

However, these cost projections have been flatly rejected by Ethanol Europe company. Zoltán Szabó, a consultant for Ethanol Europe, questioned the method used by the Commission to calculate the costs of advanced biofuels.

“No source is given but rather just an unsupportable conclusion that they will actually cost less,” he said.

According to Szabó, the price projections used by the Commission to estimate the cost of advanced biofuels are derived from a single report that is not peer-reviewed and was conducted by researchers who have a conflict of interest.

Research by Ethanol Europe found that conversion costs for lignocellulosic materials were projected to fall significantly but that costs have only moderately decreased, which is why so many plants had to close down.

In addition, raw material prices in 2015 were far lower than projected while the price of conventional ethanol in Europe was far lower than production costs projected, yet conventional ethanol plants remain in business and are profitable, the report claims.

Szabó also suggested that the Commission’s energy directorate, DG Energy, has mistakenly ignored the “highly respected and far more accurate” price indicators put forward by the Commission’s agriculture directorate, DG Agri.

According to Szabó, it is clear that the EU analysis “whereby conventional biofuels are to be replaced by cheap advanced biofuels between 2020 and 2030, is unhinged”.

“The fact that the Commission got it so wrong on advanced biofuel costs argues for the need to reassess, fundamentally, the policy proposals,” he said referring to the Renewable Energy Directive recast proposal, also referred as RED II.

To corroborate his claims, Szabó provided EURACTIV with the following graphs:

Others, however, see great potential in second-generation biofuels.

Seán Kelly, an Irish MEP from the centre-right European People’s Party (EPP), told EURACTIV that EU research money already committed to advanced biofuels is a move in the right direction that should continue.

Political support for biofuels is crucial, according to the Irish lawmaker, who hailed the Parliament’s proposal to raise the blending mandate for advanced fuels into conventional fuels.

“In the coming months the big challenge we face is to ensure that we give the required certainty to investors,” Kelly said, adding “this will be crucial to driving the switch away from fossil fuels in the transport sector.”

Another key issue in the advanced biofuels debate is the availability of technology.

The impact assessment conducted for the purposes of the ILUC Directive in 2015, warned about potential adverse impacts on security of supply and trade, as well as the risk of missing the EU’s transport decarbonisation target if technological development in deploying advanced biofuels is not achieved. (ILUC refers to Indirect Land Use Change, the process by which agricultural land is diverted from food production to other crops.)

Several EU countries, mainly from Central and Eastern Europe (the Visegrad group), support first-generation biofuels and have expressed reservations about the development of second-generation biofuels.

“There aren’t very developed technologies to produce advanced biofuels in the EU,” the Czech Ministry of Industry and Trade recently said.

Hungary claims that the availability of advanced feedstock and the production capacity is still very limited, the technology is not available on a commercial scale and, consequently, Budapest is not willing to agree to any obligatory sub-target.

“A binding target for advanced biofuels will result in extra costs for some countries, which undermines efforts to achieve the common goal to further promote renewable energy in a cost-efficient way,” a Hungarian government official recently told EURACTIV.com.

What member states say about biofuels in transport

On 27 February 2018, the first informal trilogue on the promotion of the use of energy from renewable sources will take place in Brussels.

Member states reached a general agreement on the Renewable Energy Directive at the Energy Council on 18 …

Pekka Pesonen, Secretary-General of EU farmers association Copa-Cogeca, said there was a lot of talk but little walk on biofuel technology.

“Everybody talks about how the technology should advance and make us more sustainable and this is exactly the same thing for agriculture,” he told EURACTIV. “I understand some of the advanced biofuels technologies are still in infancy phase so we don’t have huge volumes available”.

However, he said “you have to climb the tree from the bottom. The first-generation biofuels have their limitations and we recognise this. But we need the technology to increase our sustainability.”

Copa-Cogeca also emphasises the importance of the biofuel sector in providing protein feed for European farmers, who are heavily dependent on imports. The biofuel industry has helped several rural areas across Europe develop and decrease dependency on protein imports by 10-15%, he claimed.

Pesonen is also sceptical about the Commission’s argument that possible job losses due to the phase-out of first-generation biofuels could be recovered through the development of advanced biofuels.

The technology exists

Craig Winneker from the European ethanol producers’ association (ePURE) is upbeat about the prospect of second-generation biofuels, saying the technology exists and is ready for deployment at commercial scale.

There are already some commercial-scale cellulosic ethanol plants in operation around the world, he pointed out. And others in Europe have opened or announced new plants – for example, in Slovakia and Romania.

“Around the world, demand for cellulosic ethanol is also increasing as policy frameworks develop – even if they are doing so at different speeds. China, Brazil, the US, and India all have policies in place or in the works to promote ethanol production including cellulosic ethanol – all aimed to boost renewable fuel consumption and reduce carbon emissions,” Winneker told EURACTIV.

Angel Alberdi, Secretary-General of the European Waste to Advanced Biofuels Association (EWABA), referred to the revised definition of advanced biofuels put forward by the European Parliament in its first reading of the Renewable Energy Directive.

According to Parliament, advanced biofuels are those produced from feedstocks listed in Part A of Annex IX and those produced from sustainable non-crop based wastes and residues.

“The majority of advanced biofuels’  feedstocks in Part A of Annex IX were listed before we had a draft definition of advanced biofuels,” Alberdi pointed out. He says the list should be maintained as it is, saying it makes sense from the perspective of investors.

“Having said that, the case of molasses was particularly blatant,” Alberdi said. “So we, among many other stakeholders, believe that it is a good thing that molasses are out of Annex IX in both Parliament and Council’s first reading positions.”

Regarding the availability of technology, he pointed out that certain advanced biofuels are still in early stages of technological development and/or not being produced in sufficient commercial quantities.

“That’s why it makes sense to have a specific sub-target for Annex IX part A to drive investment.”

He emphasised, though, that there were mature advanced biofuels being produced in significant commercial quantities at very reasonable costs, such as waste-based biodiesel and biodiesel from used cooking oil (UCOME) and animal fats (TME).

He cited 2017 figures, which showed a combined EU consumption of UCOME and TME of around 2.7 million tons.

The Indian experience

Meanwhile, Europe is also looking at developments across the globe and in particular India, which has made significant progress in terms of advanced biofuels technologies.

In early March, an EU delegation led by Dr Kyriakos Maniatis from the Commission’s Directorate General for Energy attended a conference in New Delhi and visited Praj’s second-generation demonstration biorefinery.

Praj, a leading ethanol industry group, is in advanced talks to invest in two EU countries, according to Indian press reports.

“I visited the commercial demo plant of Praj Industries in Maskoba and I was very impressed. Compared to other similar second-generation plants across Europe and USA, the plant in India is better than those plants, simply because Praj plant is up and running and it produces ethanol whereas the plants in the USA have been trying for over a year to succeed,” Maniatis said.

“There are technological innovations taking place in the EU in the second-generation ethanol and similar innovations I can see over here in India too,” he added.

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