01 November 2006 12:44 [Source: ICIS news]
By Ivan Castano
LONDON (ICIS news)--Global biofuels production was expected to more than double by 2010 as countries continued to promote them to curb their petrol dependency and cut Co2 emissions, industry observers said.
The recent Stern report on global warming, commissioned by the UK Government, has propelled the issue of alternative energy to the forefront of public debate, although opinion is divided here as to biofuels' worth.
Some researchers claim biofuels do nothing, or even have a negative impact, on cutting Co2 emissions - but this is vigorously refuted by the industry.
"Government mandates [for biofuel/petrol blends] remain strong and there is a rising interest in meeting the Kyoto protocol," said Robert Outram, an analyst with research firm Frost & Sullivan.
For this reason, governments were also expected to step up tax subsidies to help boost the industry's growth.
According to Outram, bioethanol and biodiesel production would rise to 60bn litres and 25bn litres by 2010, up from a forecast 30bn litres and 10bn litres for this year.
Synthetic biodiesel and cellulosic ethanol were also expected to lead the so-called second generation biofuels market.
Nicolas Denis, a partner wth the McKinsey consultancy firm, agreed with Outram. He also said that the Stern report could add pressure for the introduction of a biofuels mandate across the European Union (EU).
"If [Europe] they are really serious about energy security and the environment, they will have to introduce a mandate," said Denis.
Yet there is still a lack of consensus as to the efficacy of biofuels in cutting Co2 emissions.
Industrialists and some academics such as Professor Tad Patzek from the University of California in Berkeley claim that some biofuels, most notably bioethanol from corn, actually boost Co2 rates by 50% compared to petrol and that other biofuels aren't signicantly better.
Many others disagree, however.
"It's not true," said Andrew Wakker, a manager at the ECN policy institute in the Netherlands, an energy think tank.
"Biofuels are not carbon neutral and there are energy losses in production, but they do help reduce emissions by at least 50% compared to petrol," he said, basing his analysis on his own and several other studies.
"Biofuels help cut Co2 emissions," added an official with the European Biodiesel Board.
"If they didn't we wouldn't be in this business."
Biofuels have also been criticised for promoting deforestation, because of a scarcity of feedstock to make current biofuels, while challenging the food supply of poor countries.
But observers said that the so-called second generation biofuels will help assuage those concerns and have stronger environmental benefits.
A slew of new alternative fuels are currently being researched incuding synthetic diesel, cellulosic ethanol, biogas, liquid hidrogen, biobuethanol (through a DuPont-BP joint venture), and methyl ether.
However, observers said that synthetic diesel and cellulosic ethanol were likely to outpace other technologies. This was because they could use more crops to make biofuel and help increase car-engine efficiency.
"Both of these fuels increase the range of feedstocks you can use including usually toxic crops such as switchgrass, willow trees and eucalyptus," said Denis, adding that second generation biofuels could help curb Co2 emissions by up to 80% versus petrol.
Second generation biofuels were currently being tested in pilot plants but were unlikely to be commercially available until 2012, Denis noted.
He added that while biobuethanol and liquide hydrogen presented strong benefits, their cost equation was worse than synthetic diesel or cellulosic ethanol.
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