Ready for an energy revolution
Aug. 9, 2011
by Chris Lyddon
The tone was more serious this year at the annual World Biofuels Markets Conference, held March 22-24 in Rotterdam, Netherlands. The need for liquid transport fuels dominated thinking, delegates were reminded again and again of Brazil’s huge role in the industry, and talk was that second-generation biofuels is going to be big.
It’s not quite there, said Heikki Malinen, president and chief executive officer (CEO) of engineering and consulting group Pöyry Plc.
“At the moment, all the biggest business opportunities are for consultants. Much more work has to be done to find other resources that don’t divert food production,” he said, adding that the industry has to be sure not to use up scarce water resources and also push for energy efficiency. “At this nascent stage the role of government will be essential.” Climate revolution
Jeremy Rifkin, president of the Foundation on Economic Trends, painted a picture of an economic revolution in which biofuels will play a vital role.
“We’ve had two events in the last two-and-a-half years which signal the end game for the great industrial-age based on fossil fuel,” he said. “In July 2008, oil went over $80 a barrel. At $125 a barrel, there were food riots in 22 countries.”
When oil peaked at $147, that was the economic earthquake, Rifkin said. The financial crisis was an aftershock.
“We have hit peak globalization,” he said. “Peak oil per capita happened 30 years ago.”
He also pointed out the need to tackle the problem of too much carbon dioxide in the atmosphere.
“There’s the possibility of a mass extinction this century,” he said. “It’s when energy revolutions coincide with communication revolutions that economic revolutions can happen. We have enough energy for all our species until kingdom come.”
The revolution would involve converting every building into a power plant, which would jump start a construction boom, Rifkin said. Buildings are converted and collect the energy including biofuels. That includes, for example, garbage.
“What we don’t need we share collaboratively across continents with grid IT,” he said. “Here in Europe, and hopefully around the world, we are on the cusp of a great leap forward.”
But the industry would have to cooperate to make it happen, with all renewable energies coming together, Rifkin said.
British politician Tim Yeo insisted on the need to cut carbon.
“We have to decarbonize the process of generating energy,” he said. “We have to decarbonize the built environment. We have to decarbonize transport. We have to decarbonize deforestation.”
Yeo said climate change isn’t a threat to the survival of the plant but to the conditions of stability in which one species has proliferated.
Malinen said if everyone wants the lifestyle of the Western world, there will have to be a huge increase in the production of energy. That will require a rapid move from a fossil fuel world to a biofuels world. At the same time, the availability of land is limited and there is a need to use less water. Sustainability, cellulose
There is also the need for sustainability.
“Being sustainable is clearly a license-to-operate issue for the industry,” said Philip New, CEO of BP Biofuels. “We have to accept that we are going to be held to a higher standard.”
He was not the only speaker to refer to the industry’s irritation that it is expected to operate to higher standards than food producers. Like others, he suggested that agriculture could face higher standards all round.
Next-generation fuels that use feedstocks such as woody biomass and garbage are some ways the industry can address sustainability concerns.
Andrew Owens, executive chairman of Greenergy, which sells 1/5th of U.K. road fuel, makes use of a huge range of raw materials including food waste, even misshapen cakes or pies that have passed their sell by date.
“The amount of food waste available in the U.K. is unbelievable,” he said. “We think sustainability is all about supply chain management. There are a lot of (risk-takers) in biofuel production which I think is really harming the companies that know what they’re doing.”
Biomass is one feedstock that is available globally, but not necessarily in all the right places, said Malinen. New production methods are becoming available, with a move to shorter rotations of two years compared with the current seven.
“There is still potential to increase yields,” he said. “This biomass will be pelletized and exported globally.”
There is also the potential for making use of more of the tree, including branches and twigs. “Feedstock which has not been considered economically viable in the past will become more so.”
Next-generation technology is a major undertaking, said Dr. Alan Shaw, president and CEO of Codexis, a leading developer of enzymes.
“I do believe enzymes offer the cheapest way to produce biofuels from biomass. There’s still a lot to do. I do believe the future is now truly within our reach,” he said. “We’ve also developed microbes that can process sugar directly into fuel. We’re still talking five-plus years for global deployment.”
Brazil, and its sugar industry, is the answer, Shaw said.
“The collection of the biomass already happens,” he said. “They crush it in the mills. They burn what they can and they put the rest in behind the shed. That is where our technology will be used.”
New also stressed the importance of Brazil as a biofuels producer.
“Brazil should be able to see a doubling in capacity by 2020,” he said. “The potential for scalability in Brazil is mind-blowing compared with anywhere else in the world.” Supply, demand
The extra demand for liquid fuel over the next 20 years is going to come from the developing, rather than the developed countries, according to New. “The Operation for Economic Cooperation and Development’s (OECD) demand for this stuff is going to decline. On the other hand, we are going to see a significant increase in demand from the non-OECD.”
If the extra demand isn’t in the normal place, nor is the potential extra supply.
“The bulk of the growth in supply is going to come from OPEC,” he said. “Outside OPEC, it’s going to be biofuels and to a lesser extent oilsands that’s going to meet supply.”
Unlike oil wells which fall off, plantations producing crops for biofuels have a potentially infinite life. New criticized the attention paid to vehicles designed to avoid liquid fuels.
“A lot of government support has lurched into electrical,” he said. “We just don’t think it’s a very effective way of decarbonizing the fuel mix. We’re skeptical.”
Biofuels are going to have to be competitive with oil.
“We can’t expect transitional regulation and incentives to be in place forever,” New said. “Today sugarcane ethanol is already happily competitive with oil. Cellulosic ethanol, based on the right feedstocks, will be able to get to a similar point by 2020.”
Shaw said Royal Dutch Shell made it clear that if the biofuel produced using the Codexis technology costs more than fuel from oil, they will not build the plant.
“We’re nearly there,” he said. “Dramatic technical improvements have created a global opportunity.” Europe Focuses on Biodiesel
In Europe, road fuel increasingly means diesel fuel, and a focus on replacing mineral oil means you have to replace diesel.
Raffaello Garofalo, general secretary of the European Biodiesel Board, said during a session on biodiesel that E.U. production in 2010 was estimated at 10 million tonnes, while capacity is 21.9 million tonnes.
Although the industry has fought off large-scale imports of B99 from the U.S., it’s still concerned about a figure of 1.7 million tonnes of imports from January-November 2010.
He pointed out the potential for problems with Europe’s dependence on Russia for much of its mineral diesel supply.
“One month of social trouble in Russia could mean that in Europe we can’t use any more lorries (trucks),” Garofalo said.
Like many in the industry, he bemoaned the biofuels sustainability criteria that aren’t applied to other sectors. He also criticized vague rules on land use. He also noted E.U. rules that allow the double counting of more advanced types of biofuels toward mandates.
“It would be excellent if it were implemented in the correct way,” he said. “Some people are importing biodiesel from x% of waste and x% of soy and double counting. We have to make sure this is implemented in a fair way.”
There are still, according to Garofalo, distortive and unfair practices in imports to the E.U.
“Since anti-dumping was a minimum of 20% biodiesel, some people started importing B19,” he said. “Possibly this will be declared as circumvention. There are smart people who are trading through Canada and other countries.”
Another complaint was about the system of differential export taxes applied in Argentina in which the more the product is refined, the higher the export tax.
Jean Francois Rous, director of innovation at the farmer-owned French company Sofiproteal, explained the need for biodiesel to reduce imports and to create jobs and diversify agricultural supply chains. By encouraging oilseeds production, they also help tackle Europe’s need for animal feed.
“Europe is very dependent on protein from imports,” he said. “About 75% of protein is imported. Rapeseed protein and sunflower protein together are equivalent to soy protein."